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Overview of the Business Valuation Process
A Small Business Administration (SBA) loan is a loan between a bank and small business owners providing a guarantee to the lenders for a portion of the money they lend to small business owners. This provides protection to the lenders by guaranteeing a portion of the loan amount if the small business owner were to default. SBA loans are designed to help small businesses obtain financing with favorable terms. In many cases, an independent business valuation by a qualified source is required for an SBA loan.
According to the SBA’s Standard Operating Procedures, an independent business valuation is required if:
When a business valuation is required by the SBA, the business valuation must be prepared by a “qualified source.” A qualified source is an individual who regularly receives compensation for business valuations and is accredited by one of the following recognized organizations:
When a business valuation is required for SBA lending purposes, there are additional requirements contained in the SBA’s standard operating produces, including:
SBA loans are a great way for small businesses to obtain financing. It is important that all the parties involved understand when an independent business valuation is required, who is qualified to prepare them and the specific guidelines valuation analysts must follow when preparing them.
Jason LeRoy and Ryan McKeon specialize in preparing business valuations for a variety of purposes, including SBA lending. The Valuation and Litigation Support team at Doeren Mayhew also provides forensic accounting services, marital dissolution consulting and expert witness testimony. Jason can be contacted directly at email@example.com or 248.244.3177, and Ryan can be reached at firstname.lastname@example.org or 248.434.6327.
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