Glossary · Reading the business
Business Appraisal
In short
An objective, professional assessment of a business's fair market value. Lenders typically require this for SBA loans to justify the purchase price.
What it means in a deal
For SBA 7(a) loans over $250,000 (and sometimes for smaller amounts if collateral is a concern), your lender will mandate an independent business appraisal. This appraisal must validate the purchase price and confirm the business's value, which is crucial for the underwriting process. If the appraisal comes in lower than the agreed price, you may need to renegotiate or increase your equity injection.
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 Business Appraisal
- Does the SBA require an independent business appraisal for a business acquisition costing $400,000?
- When is an independent appraisal required for non-real estate business assets being acquired?
- Can an SBA 7(a) loan cover the cost of a business valuation or appraisal?
- When is a business appraisal required for a change of ownership transaction exceeding $500,000?
- When is a separate goodwill appraisal necessary for a business acquisition loan exceeding $1,000,000?
- When is an independent business appraisal required for a change of ownership transaction exceeding $500,000?
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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