SBA loan basics
Short answer
If a business acquisition results in negative goodwill (a bargain purchase), the SBA will scrutinize the deal structure and valuation to ensure it is a sound investment.
Negative goodwill typically arises when the purchase price of a business is less than the fair value of its identifiable net assets. The SBA and lenders will ensure the valuation is robust and the acquisition is economically sound, not just a distressed asset purchase that may indicate higher risk.
A buyer proposes to acquire a business for $500,000, but an independent valuation shows its tangible and identifiable intangible assets are worth $600,000. The lender will need to understand why the purchase price is lower and confirm the business's viability.
Insider move
Lenders are wary of negative goodwill as it can signal underlying problems with the business, even if the assets appear valuable. They require detailed explanations and strong justification for the purchase price and future prospects.
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 2026-06-14. 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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