SBA Answers to Congress on Going Concern

Fifteen U.S. Representatives have sent a letter to the U.S. Small Business Administration (SBA) seeking clarification as to why the agency changed its requirements regarding real estate appraisers handling going concern appraisals for special use properties. In 2011, the SBA allowed appraisers to take on such projects after completing an eligibility course. As of January 2014, the agency changed its valuation requirements involving business and intangible assets in situations where there is a change in ownership, a special use property and a residual business value of more than $250,000 to the loan amount. In these situations, the SBA now requires lenders to obtain a separate business appraisal from an appraiser holding a certification or designation from one of five business valuation organizations. Under pressure from the real estate industry, the Congressional members are asking the SBA to provide “details and analysis” as to why an experienced appraiser isn’t qualified to handle going concern appraisals.