Updated Appraisal Policy, Imposes Evaluation Requirements
The Small Business Administration on March 29 issued revised guidance for SBA 7(a) and 504 loans following the passage of legislation that ties the SBA appraisal threshold to the threshold for
commercial real estate as established by the federal bank regulatory agencies.
The SBA threshold had long been set by statute at $250,000,
but new guidance states that an appraisal may still be needed to evaluate the creditworthiness of commercial real estate loans
makes it clear to lenders that if they do not get an appraisal, they must obtain an evaluation consistent with the Interagency
Appraisal and Evaluation Guidelines for commercial loans below the half-million-dollar threshold
Changes to SBA Lending Requirements
Effective May 1, 2015, the Small Business Administration (SBA) is updating the business appraisal
requirements for change of ownership transactions involving a Special Purpose Property.
Summary of Changes
The Going Concern Value must be appraised by a Certified
General Real Property appraiser with experience in that particular property type (4 appraisal reports within the last
It is no longer required that the business appraisal component of the going concern appraisal be completed by a designated
business appraiser. The SBA is looking for competence and experience with the particular property type.
Updated Business Appraisal Requirements for 7(a) Loans
“If an applicant business operates from a Special Purpose
Property (for example, car washes, hotels, gas stations with or without a convenience store, golf courses, medical facilities
or bowling alleys), the going concern appraisal must be completed by a Certified General Real Property Appraiser with
experience appraising the specific business/property type. Such appraisals must allocate separate values to the individual
components of the transaction including land, building, equipment and intangible assets. Finally, the Certified General Appraiser
must have completed no less than four going concern appraisals of equivalent special use property as the property being appraised,
within the last 36 months, as identified in the qualifications portion of the Appraisal Report.”
Robert E. Bainbridge MAI is one of the nation’s foremost
experts in the valuation of convenience stores and gas stations. He wrote the standard textbook and developed the Appraisal
Institute’s educational curriculum on the appraisal of convenience stores and gas stations. With over 30 years
of experience, we specialize exclusively in convenience stores and gas stations and our reports always allocate the going
concern value as required by the SBA. Our reports meet the new SBA lending requirements.
Give us a call on your next convenience store/gas station appraisal
Download a complete copy of the 2015 SBA SOP Announcement at the
link below. See Item (5) "Updated Business Appraisal Requirements for 7(a) Loans" on Page 3.