SBA SOP-COMPLIANT BUSINESS VALUATION SERVICES

The Small Business Administration (SBA) often requires a business valuation to determine the value of a small business as part of its loan application process. In these cases, the SBA typically uses a combination of the market and income approaches methods to arrive at an accurate valuation.

• The market approach involves comparing the business being valued to similar businesses that have been sold recently. The value of the business is determined based on its similarities to the comparable businesses, such as size, location, product offerings, and financial performance.

• The income approach values the business based on its expected future financial performance. The valuation is determined by projecting the business's future cash flows and discounting them to present value. This method is based on the principle that the value of a business is the present value of its expected future cash flows.

In the case of a small business, the SBA may also consider other factors that are unique to the business, such as the experience and reputation of the owners, the competitiveness of the industry, and the economic climate.

It's important to note that the SBA may not accept every valuation method, and they may have specific requirements or guidelines for valuing a business. A qualified business valuation professional can help ensure that the valuation meets the SBA's requirements and provides an accurate representation of the business's value.