Why SBA Loans and Business Acquisitions Require a Qualified Appraiser
When lenders or legal teams ask for a business valuation, they’re not just looking for a number — they’re looking for assurance that the number came from a qualified appraiser. For SBA loans, internal buyouts, or formal acquisitions, valuation isn’t just a formality. It’s a critical part of the approval process, due diligence, and documentation.
A qualified appraiser brings not only credentialed expertise but also an understanding of how to prepare reports that meet the expectations of lenders, underwriters, attorneys, and regulators. Whether you’re applying for an SBA loan or finalizing purchase and sale agreements, this level of professionalism can make or break a deal.
Let’s break down when valuation is required, what lenders look for, and how to choose the right valuation partner when the stakes are high.
What does it mean to be a qualified appraiser?
The term qualified appraiser carries a specific meaning in both the IRS and SBA contexts. For SBA lending, it typically refers to someone with a recognized valuation credential (such as CVA, ASA, or ABV) and documented experience appraising closely held businesses. The SBA Standard Operating Procedures explicitly call for independent, credentialed valuation experts in change-of-ownership scenarios, especially when buyer and seller have a prior relationship.
A qualified appraiser uses proven valuation methodologies, aligns with recognized standards, and provides detailed support for their conclusions. Their work brings credibility, not only to the borrower but to the overall transaction.
Why SBA Lenders Require Independent Valuations
Lenders aren’t just protecting themselves, they’re protecting borrowers and the SBA program itself. When a loan involves the purchase of a business, especially from a related party, an independent valuation ensures the price is fair and that loan proceeds aren’t misused.
A qualified appraiser delivers a report that supports the deal structure, provides lenders with confidence, and helps the SBA meet its underwriting and compliance goals. For borrowers, it’s often a required part of the package, not optional.
When Valuation is Required
You may need to work with a qualified appraiser if you’re:
- Applying for an SBA loan to acquire an existing business
- Negotiating internal ownership transfers or management buyouts
- Drafting or finalizing purchase and sale agreements
- Working with a buyer or seller who shares an existing relationship
In each case, the valuation supports transparency, confirms fair market value, and helps secure approval.
What makes a strong valuation for lending?
Valuation reports used in lending environments need to be defensible yet practical. A qualified appraiser understands the need to balance technical modeling with clarity for non-specialist reviewers. Lenders, underwriters, and legal teams must be able to follow the logic, even if they’re not valuation professionals.
The report must include appropriate financial analysis, comparable data where available, and a well-documented explanation of any assumptions, discounts, or adjustments applied.
Choosing the Right Valuation Partner
Timelines for loans and acquisitions can move quickly, and valuation delays can jeopardize closing. That’s why it’s critical to choose a qualified appraiser who has experience with SBA expectations, communicates clearly, and understands what lenders and attorneys need from the report.
A valuation prepared by someone without the appropriate credentials or lacking understanding of SBA Standard Operating Procedures could lead to rework, delayed approvals, or even deal failure. Working with a qualified appraiser who has walked this path before keeps the process moving and reduces unnecessary risk.
Choosing the right appraiser isn’t just about credentials — it’s also about understanding the expectations of everyone involved in the deal. Lenders want clarity. Attorneys want defensibility. Buyers and sellers want confidence. A qualified appraiser knows how to deliver all three, while keeping timelines intact and communication seamless.
Beyond SBA: Other Uses of Qualified Valuations
Even outside of SBA lending, valuations prepared by a qualified appraiser are often required in traditional financing, partner buyouts, and acquisitions involving external funding. If you’re working through purchase and sale agreements that involve investor oversight or legal review, a professional valuation helps set expectations and formalize the deal.
Some buyers even request an independent valuation as part of their due diligence process, especially in industries with fluctuating earnings or complex ownership structures.
Make Your Valuation Work for the Deal
Valuation may feel like one small item in a long financing checklist, but it’s one with a major influence on your deal’s success. A report prepared by a qualified appraiser can provide assurance to lenders, align all parties around fair market value, and help avoid closing delays or compliance issues.
Whether you’re navigating an SBA loan, structuring a buyout, or preparing purchase and sale agreements, make sure your valuation expert is up to the task — and qualified to deliver.
Need help navigating valuation for lending or acquisition?
Contact McEntire Advisory to schedule a consultation with a qualified appraiser who understands what today’s lenders and dealmakers expect.
