SBA Business Valuation Requirements Under SOP 50 10 8.1

Short answer: Under SOP 50 10 8.1, every SBA 7(a) change of ownership needs an independent business valuation from a Qualified Source, requested by and prepared for the lender. The old $250,000 threshold that let a lender value smaller deals in-house no longer appears in the SOP, and a valuation the buyer or the seller commissioned cannot be used.

Many of the pages that rank for this question still describe the old rules. This one is written from the SOP text as revised by the Technical Policy Updates effective October 1, 2026 (SBA Information Notice 5000-882227).

The $250,000 threshold is gone

Under the prior SOP, a lender could perform its own valuation when the amount being financed for the business, net of real estate and equipment, was $250,000 or less. That exception does not appear in SOP 50 10 8.1. Every reference to $250,000 in the current SOP concerns environmental investigations or the interest rate table, not business valuations. The practical result: every change of ownership now needs an independent valuation, whatever the loan size.

Who can prepare it: the Qualified Source list

The SOP defines a Qualified Source as an individual who regularly receives compensation for business valuations, is accredited by one of five organizations, and is:

independent of the loan production function, not involved in the approval of the transaction, and must not have the appearance of a conflict of interest.

The five accepted credentials are:

• Accredited Senior Appraiser (ASA), American Society of Appraisers
• Certified Business Appraiser (CBA), Institute of Business Appraisers
• Accredited in Business Valuation (ABV), American Institute of Certified Public Accountants
• Certified Valuation Analyst (CVA), National Association of Certified Valuation Analysts
• Business Certified Appraiser (BCA), International Society of Business Appraisers

It must be ordered by the lender, with no exceptions

For the individual performing the business valuation to identify the scope of work appropriately, the business valuation must be requested by and prepared for the Lender. The Lender may not use a business valuation prepared for the Applicant or the seller.

This is where the valuation and the quality of earnings now part ways. The October 1 technical update relaxed the quality of earnings rule: a lender may now accept a buyer-commissioned QoE if one of its own approved vendors reviews it and the review goes in the loan file. The valuation got no such relief. A buyer’s valuation, or a broker’s, cannot be bridged into the file. The lender orders its own. Our SOP 50 10 8.1 guide and our notes on the September 25 technical update cover the rest of the change.

The valuation must support the purchase price

The business valuation must support the Purchase Price as defined in Paragraph A.1 regardless of how the debt is structured. If the amount paid for the business exceeds the business valuation, the difference must be made up by equity.

The SOP also makes the lender check the valuer’s inputs. The lender must obtain the financial information the valuation relied on and verify it against the seller’s IRS transcripts. A valuation built on numbers that do not tie to the tax transcripts is a problem in the credit file, not just a weak appraisal.

How the valuation and the quality of earnings fit together

On Initial Acquisition and Business Expansion transactions with a purchase price of $3 million or more, the lender needs both: the SOP says the lender must obtain a quality of earnings report “in addition to the required Business Valuation.” The two are linked. The lender must use the earnings from the QoE in its debt service coverage calculation, and if that coverage does not support the valuation and the proposed debt structure, the loan amount must be reduced. See SBA quality of earnings for the QoE side of the rule.

Both documents depend on the same underlying numbers. When the SBA cash proof inside the QoE shows that reported revenue does not reach the bank, the earnings the valuation was built on are overstated as well. Sequencing the cash proof early gives the valuer verified inputs rather than the seller’s figures.

What lenders should have ready when they order the valuation

• The signed letter of intent or purchase agreement, showing the purchase price and what is included
• Business tax returns and the seller’s IRS transcripts for the periods the valuer will rely on
• Year-end and interim financial statements
• Any quality of earnings work already completed, so the valuer and the QoE work from the same normalized earnings
• A list of assets included and excluded, including real estate and equipment financed separately

Where QoEAgent fits

QoEAgent is an independent financial due diligence firm engaged for the lender’s benefit. Two of our principals hold credentials on the SOP’s Qualified Source list: Josh Cashman holds the ASA (along with the CFA), and Ron Neufeld holds the ABV (along with the CPA). On deals that need both a valuation and a QoE, the cash proof and normalized earnings from our quality of earnings work give the valuation verified inputs. See who can prepare an SBA quality of earnings report and the SBA lender checklist, or contact us to scope a lender engagement.

Summary of SOP 50 10 8.1, as revised by the Technical Policy Updates effective October 1, 2026, for planning purposes. Not legal or lending advice. Source: SBA SOP 50 10, Lender and Development Company Loan Programs.