Glossary · Reading the business
Fair Market Valuation
In short
This is an independent estimate of a business's or asset's value, representing the price at which it would change hands between a willing buyer and seller.
What it means in a deal
For an SBA acquisition loan, an independent Fair Market Valuation of the business is usually required, especially for deals over $250,000. This appraisal helps the lender ensure the purchase price is reasonable and that the business can support the debt. It's a key underwriting component.
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 Fair Market Valuation
- How does a lender determine the fair market value of business equipment used as collateral?
- 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?
- 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?
- 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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