SBA 7(a) Q&A
Short answer
For SBA loan purposes, the purchase price for a partner buyout is typically determined by an independent business valuation.
If the purchase price of a partner buyout exceeds $500,000, or if there's any indication of an arm's-length transaction not being met (e.g., family members), an independent business valuation from a qualified appraiser is required by the SBA. This ensures the purchase price reflects the fair market value of the ownership interest being acquired.
Two partners own a business valued at $1,200,000. One partner buys out the other's 50% share for $600,000. An independent valuation confirming this $600,000 as fair market value for the 50% stake would be mandatory for SBA financing.
Lenders must ensure the purchase price is justified by fair market value to prevent over-financing and protect the SBA guaranty. They rely heavily on independent valuations, especially for transactions between existing partners or related parties.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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