SBA 7(a) Q&A
Short answer
If the business valuation comes in lower than the purchase price, the deal will likely need to be renegotiated, or the buyer will need to inject more equity.
The SBA requires the loan amount to be supported by the appraised value of the business. If the valuation comes in lower than the purchase price, the lender cannot lend based on the higher purchase price. The buyer and seller must either renegotiate the purchase price to match the valuation, or the buyer must cover the difference with additional equity injection.
A buyer agrees to purchase a business for $1,000,000, with a $900,000 SBA loan. If the SBA-required valuation comes back at $850,000, the lender can only finance up to $850,000 (less the equity injection). The buyer must either convince the seller to lower the price to $850,000, or the buyer must provide an additional $150,000 in equity to bridge 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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