Does SBA require a machinery & equipment appraisal? Short answer: NO. Under SOP 50 10 8, SBA does not mandate an M&E appraisal in most cases. It’s typically up to the lender. In some cases, lenders may request a separate M&E appraisal if: The equipment is used and collateral value needs to be documented The … Continue reading ⚙️ When You Do (and Don’t) Need an M&E Appraisal for SBA Loans
SBA 7a appraisal
🧠 Normalizing Owner Compensation
💰 Overpaying or underpaying the owner? Either way, the valuation will be off. Normalizing owner compensation is one of the most important steps in calculating free cash flow for SBA 7(a) deals. We use industry comp data to set a realistic salary—not what the buyer or seller wants to pull. ⚠️ Inflated salary = undervalued … Continue reading 🧠 Normalizing Owner Compensation
📚 Valuation Myth: Bankability Equals Value
The Myth:If the lender approves the deal, the business must be worth the price. The Reality:Loan approval focuses on repayment ability and risk tolerances — not necessarily true economic value. Bankability doesn’t automatically confirm fair market value. Why It Matters:Confusing financing approval with valuation quality can lead to overpriced acquisitions and unsupported loans. Practical Tip:Always … Continue reading 📚 Valuation Myth: Bankability Equals Value
✅ What the SBA Really Requires in a Business Valuation
The SBA has specific valuation requirements. Must be performed by a qualified source Must be based on supported methods Must use the fair market value standard Must be consistent with good appraisal practice Takeaway: A compliant valuation isn’t optional—it’s mission critical. Knowing the SBA's requirements inside and out is part of lending well. Check out … Continue reading ✅ What the SBA Really Requires in a Business Valuation
🚩 Red Flag Story: Family Payroll Games
🚨 Family members on payroll who don’t work there? That’s a valuation killer. We found: $38K to a retired uncle $21K to a daughter in college $12K to a spouse listed as “office admin” (but worked elsewhere full-time) These non-operating expenses distorted the true free cash flow. After cleaning them out, the value increased 22%. … Continue reading 🚩 Red Flag Story: Family Payroll Games
📚 Valuation Myth: Revenue Multiples Are Universal
The Myth:You can apply a standard revenue multiple across all industries. The Reality:Revenue multiples vary significantly depending on margins, risk, industry dynamics, and growth potential. What works in SaaS, for example, doesn’t work for manufacturing or retail. Why It Matters:Applying the wrong multiple can lead to huge valuation errors — especially in SBA lending and … Continue reading 📚 Valuation Myth: Revenue Multiples Are Universal
🏛️ What It Means to Be USPAP Compliant
USPAP governs how valuation work is developed and reported. Though not required for SBA valuations, following USPAP helps ensure your appraisal is credible, well-supported, and auditable. Takeaway: Not all valuation reports are USPAP compliant. And not all SBA lenders know the difference. Check out our article and video on this topic!
🧠 Why Multiples Aren’t Magic
📈 Multiples are just a shortcut. Not a value. Valuing a business based on “a 3x multiple” is like pricing a house based only on square footage. Real valuation = real analysis: Adjusted free cash flow Industry benchmarks Company-specific risks Working capital needs Multiples don’t close loans. Sound valuations do.
📚 Valuation Myth: Sellers Don’t Need Valuations
The Myth:Only buyers need a business valuation. The Reality:Sellers benefit even more from accurate valuations. A solid valuation helps set realistic expectations, improves negotiation leverage, and prepares sellers for buyer scrutiny. Why It Matters:Sellers who overestimate value often face failed deals, delayed closings, or steep price reductions. Practical Tip:Get a professional valuation before marketing your … Continue reading 📚 Valuation Myth: Sellers Don’t Need Valuations
🏛️ What FIRREA Really Requires for Business Appraisals
FIRREA sets the rules for federally regulated lenders—but most folks don’t realize it does not require USPAP compliance for business valuations. However, it does require supportable, well-reasoned opinions from qualified professionals. Takeaway: Know the difference between FIRREA, USPAP, and SBA SOP—each governs appraisals differently. Check out our article and video on this topic!
Highland Global Business Valuations 