SBA 7(a) Q&A
Short answer
The purchase price allocation requires a detailed breakdown of the total purchase price across specific assets acquired, such as inventory, equipment, real estate, and goodwill, typically provided by the seller and buyer.
For business acquisitions, the SBA requires a clear allocation of the purchase price to various assets to ensure proper collateral valuation, determine eligible loan uses, and establish the basis for depreciation for the borrower. This allocation usually aligns with tax reporting requirements.
A business purchased for $750,000 might allocate $100,000 to inventory, $150,000 to equipment, $200,000 to real estate, and $300,000 to goodwill. This breakdown must be documented in the purchase agreement or an addendum.
Insider move
Lenders review the purchase price allocation to ensure it is reasonable, supported by appraisals for assets like real estate and equipment, and aligns with the business valuation to avoid over-financing certain asset classes.
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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