The Small Business Administration has long been the primary lender for people buying an existing business. And as a government agency it is subject to changing rules and policies. Sometimes the changes are difficult to understand but in the case of the new SBA lending rules I think they are excellent changes that will benefit many business buyers and sellers.
The primary change is requiring an independent assessment of a businesses value. For all loans over $350,000 an independent valuation must be made before the lender will approve the loan. This should help buyers feel more confident that the business is worth what they are paying.
For sellers this means they need to have reasonable selling prices or the seller will need to be the lender willing to finance the buyer.
There are several other changes that are more mechanical than substantive but all of the changes improve the SBA lending program for buyers, sellers and most importantly, the taxpayers.
