On October 1, 2010, changes to the Small Business Administration’s (SBA) 501 10 (c) will go into effect. These changes affect SBA loans that involve a change of ownership of fixed assets. Starting tomorrow, when these fixed assets change hands, the following will apply.
If the fixed assets are given a value other than depreciated net book value, an equipment appraisal must be ordered.
If an application is submitted to the Loan Guaranty Processing Center, a business valuation has to be part of the loan application.
A copy of the financial information relied upon by the person who performed the valuation must be submitted to the lender for comparison with IRS transcripts.
If the application for an SBA loan is submitted under delegated authority, the business valuation may be performed and reviewed after an SBA loan number is issued, but before closing. In this case, a credit memorandum that compares the loan amount and the business valuation must be submitted. Any amount in excess of the business valuation cannot be financed with the SBA-guaranteed loan.
Present Value LLC is a nationwide appraisal and advisory company that provides a range of professional services such as Certified Machinery and Equipment Appraisals, Inventory Appraisals, Asset Verification Services, Business Valuations, and Real Estate Appraisals. Contact us today!
