SBA Business Valuation and SBA Business Appraisal Requirements Change
The SBA in SOP 50 10 5(H) recently revised the requirements for business appraisals or business valuations in change of ownership transactions. For those of you new to the government lending world, SBA is the Small Business Administration and the SOP is their Standard Operating Procedures. In this summary article I will mention a few of the bigger items.
- An independent business appraisal or business valuation will be needed if the amount financed less appraised real estate and equipment value is over $250,000, or if there is a close relationship between the buyer and seller (family members, business partners, employee buy-out etc.)
- A qualified source must perform the appraisal (Harvest’s appraisers qualify as qualified sources).
- Special Purpose Properties, limited market property with a unique physical design, special construction materials or layout that restricts the utility must use a Certified General Real Property Appraiser which is a real estate appraiser who has taken special courses and experiecne.
- The scope of work in the business appraisal must state if the transaction is a stock or asset sale. It must clearly explain what assets are included in the sale and if any assumed debt is being included.
There are more details in the full SOP which was effective May 1, 2015. The full SBA SOP may be obtained by clicking here. The business appraisal and business Valuation information begins on page 171.
Gregory Caruso, Esq., CPA, CVA
Harvest Business Advisors
Business Valuation, Business Brokerage
SBA Valuations throughout the 48 States
Offices in Maryland and New Jersey