SBA tightens business acquisition lending requirements

Description

Abstract: This brief article summarizes a recent SBA move to rein in lenient lending practices to small businesses: SBA Standard Operating Procedure (SOP) 50 10 5(A). The new requirement calls on business acquisition loan applicants to submit an independent business appraisal for all loans greater than $250,000 (excluding the appraised value of real estate and equipment). The article explains that the SBA defines a “qualified source” for the independent appraisal as someone who regularly receives compensation for business valuation. It also notes the controversy resulting from restrictions the SBA has placed on loans based on a company’s goodwill.