SBA 7(a) Q&A
Short answer
For a partner buyout, the business valuation must be conducted by an independent, qualified appraiser to determine the fair market value of the equity being acquired.
For a change of ownership involving a partner buyout, an independent business valuation is required. The valuation determines the fair market value of the business and the equity being purchased, ensuring the loan amount is justified and not inflated.
If you're buying out your 50% partner in a business valued at $1.2 million, the independent appraisal will confirm that value. Your SBA loan would be based on 50% of the appraised value, plus any working capital or other eligible expenses.
Insider move
Lenders rely heavily on independent, qualified valuations for partner buyouts to ensure the transaction is arm's length and the loan amount is adequately supported by the business's value. They verify the appraiser's credentials and the methodology used.
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 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. 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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