Glossary · Reading the business
Business valuation
In short
An independent appraisal the lender orders. The SBA loan can't finance any amount above it.
What it means in a deal
For SBA deals over a set threshold, the lender must order an independent business valuation from a qualified appraiser. If the appraised value comes in below the purchase price, the SBA loan can only be sized against the appraised value — not the price you agreed to pay. This creates a gap you'd need to fund with additional injection. Experienced buyers sometimes commission their own valuation before going to contract to avoid surprises.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-16. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Business valuation
- When is an independent business valuation required for a partner buyout?
- What if the business valuation is insufficient to support the purchase price?
- What is the importance of a professional business valuation for an acquisition?
- Is a separate business valuation required for an SBA 7(a) acquisition loan?
- What happens if my business valuation comes in lower than the purchase price?
- How thoroughly does the SBA review the business valuation report provided by the lender?
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 2026-06-16 · 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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