Glossary · Reading the business
Valuation Methodology
In short
This is the specific approach used to determine a business's fair market value, often based on income, assets, or market comparisons. It directly impacts your offer price.
What it means in a deal
For SBA loans over a certain threshold, an independent business valuation is required. The appraiser will use methods like the asset approach, income approach (e.g., SDE or EBITDA multiples), or market approach. Understand the methodology to challenge or confirm the business's asking 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 Valuation Methodology
- When is an independent business valuation required for a partner buyout?
- What valuation methods are acceptable for assessing goodwill in an SBA acquisition?
- 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?
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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