Business appraisal

Definition

A third-party valuation the lender orders, which caps what the loan will finance.

Why It Matters

It arrives after the LOI and it can end a deal outright, because the SBA will not lend against a price above the appraised value. A number under your agreed price forces the seller down, forces you to bring more cash, or kills the deal, so it is worth testing the price against comparable sales before you sign anything. Ordering it is the lender's call and the fee is yours either way.

In numbers: A $1.2M price with $150,000 of equipment and no real estate leaves $1.05M of goodwill being financed, past the $250,000 line that triggers an independent appraisal, and the fee runs roughly $3,000.