SBA 7(a) Q&A
Short answer
There is no specific maximum percentage of the purchase price that can be allocated to goodwill, as long as the overall purchase price is justified and reasonable.
The SBA does not set a hard cap on the percentage of goodwill in an acquisition. Instead, the focus is on the reasonableness of the total purchase price and its allocation, typically supported by an independent business valuation. The valuation must justify all components, including tangible assets, intangible assets, and goodwill, to ensure the business can support the debt.
If you are acquiring a service-based business for $1,000,000, where tangible assets are only $100,000, and $900,000 is allocated to goodwill, this is permissible if the business valuation supports the entire $1,000,000 purchase price based on its earnings and cash flow.
Insider move
Lenders are concerned that the business's cash flow can service the debt, especially when goodwill is a significant portion of the acquisition. They rely heavily on a robust, independent business valuation to ensure the purchase price and its allocation are reasonable and sustainable.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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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