SBA 7(a) Q&A
Short answer
For a partner buyout, the SBA requires an independent business valuation from a qualified appraiser to establish the fair market value of the departing partner's share and the overall business.
When an SBA loan is used to finance a partner buyout, an independent valuation of the business is mandatory if the total financing exceeds $250,000. This valuation determines the fair market value of the business and, by extension, the departing partner's ownership stake. This ensures that the loan amount is reasonable for the value being acquired and prevents inflated purchase prices.
You are buying out a partner for $400,000. The lender will require an independent business valuation to confirm that the $400,000 represents a fair price for that partner's ownership percentage based on the overall business value, for example, a business valued at $800,000 if your partner owns 50%.
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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