SBA loan basics
Short answer
If the business valuation for an acquisition comes in lower than the agreed-upon purchase price, the lender will typically only finance up to the appraised value. The difference usually needs to be covered by additional borrower equity or a seller note on full standby.
For business acquisitions over $500,000, the SBA generally requires an independent business valuation to ensure the purchase price is reasonable. If the valuation is lower than the purchase price, the lender cannot lend based on the higher price. The borrower must make up the difference with additional equity, or the seller must provide a note for the difference, placed on full standby for the life of the SBA loan.
A business is being purchased for $1,000,000, but the independent valuation comes in at $900,000. The lender will only finance up to $900,000 (minus the minimum equity injection). The $100,000 difference must be funded by the buyer's additional cash or a $100,000 seller note on full standby.
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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