SBA 7(a) Q&A
Short answer
The SBA requires an independent business valuation to ensure the purchase price for a partner buyout is fair, justifiable, and reflects the true market value.
For business acquisitions, including partner buyouts, especially those exceeding $500,000, the SBA mandates an independent business valuation conducted by a qualified appraiser. This valuation determines the fair market value of the interest being acquired, ensuring the purchase price is reasonable and not inflated. The valuation helps prevent overpaying for the business, which could jeopardize repayment capacity.
A buyer uses an SBA loan to purchase a partner's 50% stake for $350,000. The lender requires an independent business valuation of the entire company, confirming the $350,000 is a fair and justifiable price for that 50% interest.
Insider move
Lenders rely on independent valuations to justify the purchase price. They meticulously review the appraisal report to ensure it is thorough, unbiased, and compliant with SBA guidelines, especially when intangible assets are involved.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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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