Do I need an equipment appraisal for an SBA 504 refinance?
Yes, when used equipment is part of the refinance. The SBA's SOP 50 10 8.1 (effective October 1, 2026) requires an equipment appraisal when used equipment in a 504 project is being refinanced or is bought from someone other than an equipment dealer. The appraisal must be a written document from a qualified person who is independent of the transaction and has inspected the equipment on site, dated no more than 12 months before the application. Your lender or Certified Development Company (CDC) confirms the requirement for your transaction.
Lukes & Lukes is an independent machinery and equipment appraisal firm; we prepare 504 collateral appraisals to that standard.
By Jared Lukes · CEO & lead appraiserUpdated
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Why is equipment appraised in an SBA 504 refinance?
In a 504 refinance the value of the assets sets the size of the loan. Under 13 CFR 120.882(g), a refinance without expansion is measured as a "Refinancing Project" equal to the fair market value of the eligible fixed assets securing the debt, and the 504 loan plus the third party loan may be no more than 90% of the fair market value of the fixed assets that serve as collateral. The equipment appraisal supplies that fair market value. An owner's estimate or a dealer's figure is neither independent nor prepared to a standard.
| Element | What the 504 file needs | Why it matters |
|---|---|---|
| Independence | An appraiser with no stake in the refinance | The value reads as objective to the lender, the CDC, the SBA or an examiner. An owner's estimate or a dealer's figure does not. |
| Qualification | A person qualified to provide a valuation, who has inspected the equipment on site | The SOP's equipment appraisal paragraph for 504 loans. |
| Date | No more than 12 months before the date of the application | An older appraisal does not satisfy the SOP. |
| Premise of value | Fair Market Value (FMV), with OLV or NOLV where the lender also asks for it | The Refinancing Project and its 90% limit are measured at fair market value. |
| Support | A conclusion built from inspection, with an itemized appendix and photographs | The file has to hold up through SBA and examiner review. A database printout does not. |
| Early confirmation | The specifics confirmed with the lender or CDC at the start | Requirements turn on the structure of the deal. |
Which value does a 504 refinance appraisal use: FMV, OLV or NOLV?
A 504 refinance appraisal reports Fair Market Value (FMV), the value the regulation uses to measure the Refinancing Project and its 90% loan-to-value limit. FMV is the price between a willing buyer and a willing seller, neither under compulsion, both reasonably informed.
The third party lender holds the first lien and often asks for Orderly Liquidation Value (OLV) or Net Orderly Liquidation Value (NOLV), OLV after the costs of selling, for its own credit decision. One report can carry FMV and OLV side by side. We confirm the premise with the lender and CDC in writing before we begin.
Who can perform an SBA 504 equipment appraisal?
A 504 equipment appraisal can be performed by a person qualified to provide a valuation who is independent of the transaction and has inspected the equipment on site. The borrower, the seller, the lender and the CDC cannot fill the role. At Lukes & Lukes the work is performed by a NEBB-certified Machinery & Equipment Appraiser (CMEA) under USPAP, and we write for the credit desk.
What do the lender and CDC expect in the appraisal report?
The lender and the CDC expect a report that identifies every refinanced asset and supports its value.
- Independence: an appraiser with no interest in the refinance.
- USPAP compliance: a report prepared to the governing standard.
- The right premise: OLV, NOLV or FMV as the structure requires, clearly stated.
- Inspection and support: a conclusion built from inspection, with an itemized appendix and photographs, not a database printout.
- A defensible file: documentation that holds up through SBA and examiner review.
Can equity in refinanced equipment count toward the borrower's contribution?
Yes, in one case. The SOP allows the borrower's equity in equipment to count toward the Borrower Contribution in a 504 debt refinance, with or without expansion, if the debt being refinanced was originally used to acquire that specific equipment. The appraised value, less the debt against it, is that equity.
If your 504 refinance includes used equipment, plan on an independent appraisal and confirm the specifics with your lender or CDC early. Setting the premise and scope at the start avoids a re-do late in underwriting. We do not quote a value before inspection, and we scope the assignment to what the lender and the SBA actually need.
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See how we handle SBA equipment appraisals →
Common questions
Answers, up front.
Is an equipment appraisal always required for a 504 refinance?
It is required when used equipment in the project is being refinanced or is bought from someone other than an equipment dealer. SOP 50 10 8.1 asks for a written appraisal from a qualified person independent of the transaction, based on an on-site inspection and dated no more than 12 months before the application. Confirm the structure of your deal with your lender or CDC.
Which value premise does the SBA want for equipment collateral?
Fair Market Value. Under 13 CFR 120.882(g) a refinance without expansion is measured at the fair market value of the eligible fixed assets, and the 504 and third party loans together may not exceed 90% of it. The third party lender may also ask for Orderly Liquidation Value (OLV) or NOLV for its own credit. We confirm the premise with the lender and CDC before we begin.
Who can perform the appraisal?
A person qualified to provide a valuation, independent of the transaction, who has inspected the equipment on site. Our reports are prepared under USPAP by a NEBB-certified Machinery & Equipment Appraiser (CMEA) and written for the credit desk.