The Small Business Administration (SBA) is a government agency that was created to assist small-business owners with their financing needs. According to the SBA Standard Operating Procedure (SOP) 50 10 5(C), when the loan amount is higher than $250,000 or if there is a close relationship between buyer and seller, the lender must obtain a SBA business valuation by an independent, qualified business appraiser.
A qualified source for SBA business valuation reports is defined as either:
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Certified or Accredited Valuation Analyst (CVA or AVA) from the National Association of Certified Valuation Analysts
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Certified Business Appraiser (CBA) from the Institute of Business Appraisers
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Certified Public Accountant (CPA) that performs the valuation in accordance with the Statement on Standards for Valuation Services (SSVS) published by the American Institute of CPA’s (AICPA)
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Accredited in Business Valuation (ABV) from the AICPA; and
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Accredited Senior Appraiser (ASA) from the American Society of Appraisers
SBA Loan Checklist
By following this checklist, it is easy to determine whether a valuation is required for a particular SBA loan:
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Step 1: Is it a 7(a) guaranteed loan?
The valuation provisions only apply to the 7(a) program.
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Step 2: Is it a debt refinancing?
If no, go to Step 3. If yes, is the debt being refinanced originally used to finance a change in ownership?
If yes, a valuation is required.
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Step 3: Does the transaction involve a change in ownership (sale of the company)?
If yes, go to the next step. If no, then no valuation is required.
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Step 4: Are the buyer and seller closely related (family members or partners)?
If yes, skip the remaining steps because a valuation is required. If no, go to the next step.
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Step 5: Determine the total amount being financed.
Financing from all sources including 7(a), 504, seller, and any other sources must be included.
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Step 6: Subtract the appraised value of real estate and/or equipment being financed from the total amount being financed.
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Step 7: Is the result of Step 6 greater than $250,000?
If yes, a valuation is required. If no, no valuation is required. If an appraisal is needed, you need to obtain a business valuation from an SBA qualified appraiser.
Why Work with Circumference Valuations?
There are several advantages working with Circumference Valuations:
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Objective Business Valuation: As a qualified business appraiser, we can provide you with a business appraisal which will meet the SBA requirements.
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Reasonable Cost: Circumference Valuation offers products that are of the highest quality yet at a remarkably affordable price. A valuation report acceptable to the SBA costs between $1,500 and $2,500.
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Great Credentials: Credentialed to perform business valuations by both the National Association of Certified Valuation Analysts and the Institute of Business Appraisers). Both organizations are qualified by the SBA.
- Speedy Service: You can have a quality appraisal of the business within 2-3 weeks; and if there is a rush, we offer expedited services.
With a Circumference Valuation, a SBA guaranteed business loan is much more attainable.
What a Summary Valuation Report Provides
This level of report will establish a documented opinion of value by a credentialed appraiser for:
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Obtaining a Small Business Loan (Meets SBA requirements);
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Purchasing a small business;
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Establishing a value for buy/sell agreement; and
- Providing a basis for a business plan.
Learn More
To learn more about valuations for Small Business Administration loans, contact the experts at Circumference Valuations by calling (877) 988-0911 or online. GO
Other Situations Benefitting from Valuations:
Divorce | Retirement or Estate Planning | Buying or Selling a Business or Professional Practice
