Glossary · Reading the business
Narrative appraisal
In short
This is a comprehensive valuation report that details the appraiser's methodology, assumptions, and conclusion of a business's fair market value. As a buyer, you care because it provides an independent assessment of what you're paying for the business.
What it means in a deal
For larger SBA 7(a) deals, a full narrative business appraisal is often required, particularly when there's significant goodwill or complex assets. This report justifies the purchase price to the lender and helps ensure that the value being financed is supported by market data and accepted valuation principles. Review it carefully to understand the valuation rationale.
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 Narrative appraisal
- What are the consequences if the NAICS code entered into E-Tran differs from the primary business activity in the loan narrative?
- What is the specific impact if the NAICS code entered into E-Tran differs from the primary business activity described in the loan narrative?
- Is an independent appraisal always required when an acquisition includes significant goodwill?
- When is an independent appraisal required for non-real estate business assets being acquired?
- Does the SBA require an independent business appraisal for a business acquisition costing $400,000?
- Can an SBA 7(a) loan cover the cost of a business valuation or appraisal?
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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