SBA 7(a) Q&A
Short answer
If the business valuation comes in lower than the purchase price, the lender will likely require you to restructure the deal, either by reducing the purchase price or increasing your equity injection.
SBA loans cannot finance 'excessive' purchase prices unsupported by an independent valuation. If the valuation is lower than the agreed price, the difference must typically be covered by additional buyer equity or a reduction in the purchase price. The SBA loan amount cannot exceed the appraised value.
If you agree to buy a business for $1 million, but the valuation report supports only $900,000, you would need to either negotiate the price down by $100,000 or contribute an additional $100,000 in cash equity to close the gap.
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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