SBA 7(a) Q&A
Short answer
For partner buyouts, the SBA requires a business valuation to ensure the purchase price for the exiting partner's share is reasonable and supported.
A professional business valuation is mandatory for change of ownership transactions, including partner buyouts, to establish the fair market value of the business and thus the reasonableness of the purchase price for the partner's share. This protects against overpaying, which could jeopardize the business's ability to repay the loan.
A partner is buying out their co-owner for $250,000. An independent business valuation determines the fair market value of the exiting partner's share is $240,000. The lender will use this valuation to assess the reasonableness of the $250,000 purchase price.
Insider move
Lenders require an independent business valuation for all change of ownership transactions to justify the purchase price. They ensure the valuation is conducted by a qualified professional and that the loan amount aligns with the business's value and repayment capacity.
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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