Glossary · Reading the business
Asset-based approach
In short
This is a business valuation method that determines a company's worth by summing the fair market value of its assets, minus its liabilities.
What it means in a deal
For SBA loans, especially those with significant tangible collateral, the asset-based approach helps establish the liquidation value of the business's assets. While cash flow is primary, a strong asset base provides comfort to the lender and the SBA, acting as collateral. It's often used in conjunction with other valuation methods.
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-based approach
- What is the difference between an asset and stock purchase in a buyout?
- What is the interest rate on an SBA 7(a) loan based on?
- What constitutes an ineligible business for an SBA 7(a) loan based on activity?
- How does a recent significant personal asset purchase affect my SBA 7(a) loan application?
- What if the business I'm acquiring is primarily home-based without a commercial storefront?
- What if a business exceeds the SBA size standard based on revenue but not employees?
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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