Glossary · Reading the business
Asset Approach(Cost approach)
In short
This is a business valuation method that determines value by summing the fair market value of a business's assets and subtracting its liabilities.
What it means in a deal
While useful for capital-intensive businesses, the SBA often prefers the Income Approach for valuing operating businesses, especially when Goodwill is a significant component. The Asset Approach helps verify the underlying tangible value and collateral.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Asset Approach
- What is the difference between an asset and stock purchase in a buyout?
- How does a recent significant personal asset purchase affect my SBA 7(a) loan application?
- What if the business I'm buying has intellectual property (e.g., patents, trademarks) as its main asset?
- How does an SBA 7(a) loan address the financing of intellectual property as a major business asset?
- Can an SBA 7(a) loan be used to purchase a business where goodwill is the primary asset?
- When is personal real estate required as additional collateral for a 7(a) loan with a business asset shortfall?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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