Services > SBA Lending

SBA Lending

GRW Appraisal Services is experienced at providing business valuations for lenders under the SBA’s Loan Guarantee Program and understands its Standard Operating Procedures “SOP” as outlined in SBA SOP 50 10 5. Under the loan program the recently updated SOP provides requirements for lenders and appraisers.

SBA 7(a) loan proceeds may be used to establish a new business or to assist in the acquisition, operation, or expansion of an existing business. Below we address SOP requirements for such loans.

Is an Independent Appraiser Needed?
A
The SOP states that under specific circumstances the lender must obtain an independent valuation of a business that applies for an SBA loan. Circumstances include: 

• The subject transaction is between related parties such as:

a) Employer / Employee
b) Family member / Family member
c) Owner / Co-owner
d) Other

 
• If the loan is a debt refinancing, was the debt being refinanced originally used to finance a change in ownership? If yes, a valuation is required.

• There is a change of ownership and the business has intangible value greater than $250,000. Intangible value can be defined as a company’s selling price (or appraised value) reduced by the value of all assumed tangible assets and liabilities. Assumed tangible assets may include working capital, real property, fixed assets, machinery and equipment, etc.

Other Requirements
A
• The appraiser must be independent and have no appearance of a conflict of interest (such as a direct or indirect financial or other interest in the property or transaction). To be independent: 1) the appraiser must be engaged and paid directly by the lender, and 2) the report must be prepared for the lender. 

• The appraisal report must be prepared in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) and use one of the following reporting options:

a) A self–contained appraisal report; or
b) A summary appraisal report.

 
In short, we believe it is important to look for an appraiser with knowledge of SOP and USPAP regulations and is committed to following them. We understand the SBA SOPs, and our firm is committed to following USPAP and applicable regulations, including SOPs as required for SBA loan guarantee purposes.

Contact GRW Appraisal Services to discuss the type of services needed and how we can help you achieve your goals.