SBA 7(a) Q&A
Short answer
If the valuation is significantly lower, the deal is at risk. The buyer and seller must renegotiate the purchase price, the buyer must increase equity, or the deal may not proceed with SBA financing.
The SBA will only finance the lesser of the purchase price or the appraised value. If the valuation is significantly lower than the agreed-upon purchase price, the buyer cannot borrow against the difference. This gap must be covered by the buyer's additional cash equity or by renegotiating the purchase price with the seller.
A buyer agrees to purchase a business for $1,000,000. The independent valuation comes in at $850,000. The buyer must either renegotiate the price to $850,000, or contribute an additional $150,000 in equity to bridge the gap.
Insider move
Lenders cannot fund an amount exceeding the appraised value. A significant discrepancy puts the loan at risk of denial unless the buyer can cover the difference in cash or the seller agrees to reduce the price.
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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