Glossary · Reading the business
Business Fair Market Value
In short
This is the price at which a business would change hands between a willing buyer and a willing seller, with both having reasonable knowledge of relevant facts and neither being under compulsion to buy or sell. It’s what the business is truly worth.
What it means in a deal
For SBA 7(a) loans over $500,000, an independent business appraisal is typically required to determine the fair market value. This ensures the loan amount is justified by the asset's value and prevents over-lending. As a buyer, this appraisal provides a third-party validation of the deal price.
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 Fair Market Value
- How does a lender determine the fair market value of business equipment used as collateral?
- How does the SBA evaluate the fair market value of goodwill in a business acquisition for financing?
- Can the fair market value of raw materials I contribute to the acquired business count towards equity?
- How does the SBA verify the fair market value of assets contributed as equity injection?
- If a borrower contributes equipment as equity, how does the lender verify its fair market value?
- Can the fair market value of equipment I already own be used as equity for an acquisition?
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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