SBA Requires a Certified Business Appraisal
When is an independent business valuation required?
If the amount being financed (including any 7(a), 504, seller, or other financing) minus the appraised value of real estate and/or equipment being financed is $250,000 or less, the lender may perform its own valuation of the business being sold, unless the lender’s internal policies and procedures require an independent business valuation from a qualified source.
If the amount being financed (including any 7(a), 504, seller, or other financing) minus the appraised value of real estate and/or equipment is greater than $250,000 or if there is a close relationship between the buyer and seller (for example, transactions between family members or business partners), the lender must obtain an independent business valuation from a qualified source.
What is a qualified source?
A “qualified source” is an individual who regularly receives compensation for business valuations and is accredited by one of the following recognized organizations:
Accredited Senior Appraiser (ASA) accredited through the American Society of Appraisers
Certified Business Appraiser (CBA) accredited through the Institute of Business Appraisers
Accredited in Business Valuation (ABV) accredited through the American Institute of Certified Public Accountants
Certified Valuation Analyst (CVA) accredited through the National Association of Certified Valuation Analysts
A new change to the SOP in 2014 is that a CPA without one of the credentials listed above is not considered a qualified source.