Frequently Asked Questions

What is loan underwriting valuation, and why is it important?

Loan underwriting valuation is the comprehensive assessment of a borrower's financial status and creditworthiness, crucial for lenders to make informed decisions regarding loan approvals, terms, and amounts while mitigating risks associated with potential defaults.

When is a valuation required for SBA loans?

Valuations for Small Business Administration (SBA) loans are typically required during the loan application process when the lender needs to assess the value of the business or its assets used as collateral, specifically for loans where the collateral's value is a significant factor in determining loan approval or terms.

What is the SBA Standard Operating Procedure 50 10 7?

“If the amount being financed (including any 7(a), 504, seller, or other financing) minus the appraised value of real estate and/or equipment is greater than $250,000 or if there is a close relationship between the buyer and seller (for example, transactions between family members or business partners), the lender must obtain an independent business appraisal from a qualified source.”

What are the SBA Standard Operating Procedures?

All Reports Must:

Be requested and engaged by the lender
Be prepared for the lender
Identify whether the transaction is an asset or stock purchase
Explicitly state what is included in the sale (including any assumed debt)
Include a conclusion of value
Include qualifications of the individual performing the valuation
Include a signature with certification page

Other Requirements:

The lender may not use an appraisal which is prepared for the applicant or seller
The cost of the appraisal may be passed on to the Small Business Applicant

Is Value Buddy a qualified source for SBA underwriting valuations?

Yes, we are a qualified source under the current SBA SOP 50 10 7.1. All reports are prepared and certified by an expert appraiser holding a CVA from the NACVA.

How can I learn more about SBA business valuations?

Our team writes regular articles on SBA business valuations that you can read here.

What is Value Buddy’s lending risk assessment?

Our lending risk assessment is a detailed analysis of potential risk factors that may impact default rates, such as the business’s core product’s positioning to weather a recession, impacts of inflationary pressures on the business, and ESG.

How long does the valuation process take?

We guarantee turn times of 3-5 business days, which is equivalent to rush delivery from our competitors.

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