Going Concern Policy Revised by SBA

Small Business Administration

In its Washington Report and State News web section, the Appraisal Institute (AI) recently reported that the U.S. Small Business Administration (SBA) released an updated Standard Operating Procedure 50-10 5 F.  The update institutes guidelines for SBA lenders making use of SBA credit assistance.  The alteration affecting valuation involves business and intangible assets in circumstances where there is a change in ownership, a special use property, and a residual business value contribution of more than $250,000 to the loan amount.  In scenarios meeting these criteria after January 2014, the SBA will require lenders to obtain a separate business appraisal from a state-licensed or state-certified professional holding certification from a recognized business valuation institution.  Prior to this change, the SBA had allowed qualified real estate appraisers to conduct going concern appraisals with allocation among assets so long as the appraiser completed a related AI course.