SBA 7(a) Q&A
Short answer
The valuation of an exiting partner's share is typically based on a fair market valuation of the business. For transactions over $250,000, an independent valuation prepared by a qualified source is required to determine the business's fair market value.
When an SBA loan is used for a change of ownership, including a partner buyout, the purchase price must be justified by an independent business valuation for transactions exceeding $250,000. This ensures the loan amount is based on the actual value of the assets and goodwill being acquired, preventing over-financing.
If you're buying out your partner's share for $400,000, and the business's total value is determined to be $800,000 by an independent appraiser, the loan for your partner's share would be based on this independently verified valuation.
Insider move
Lenders are concerned about paying an inflated price for a business, especially in related-party transactions like partner buyouts. The independent valuation provides assurance that the purchase price, and thus the loan amount, is reasonable and supportable.
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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