SBA equipment appraisals for 7(a) and 504 loans.
An SBA equipment appraisal from Lukes & Lukes is an independent, USPAP-compliant opinion of value prepared to the SBA Standard Operating Procedure (SOP) standard, so the file moves through underwriting and SBA review without a callback.
Which value applies
The credit decides the premise.
Most SBA loans rest on Fair Market Value (FMV), the price equipment would bring between a willing buyer and a willing seller, neither under pressure, both informed. FMV is the working number for a going concern that intends to keep using its assets, which covers the majority of 7(a) and 504 financing.
When the credit carries more risk, or when the lender wants to see the downside, we also report Orderly Liquidation Value (OLV), the price the assets would bring in an advertised sale over a reasonable period, and Net Orderly Liquidation Value (NOLV), that figure after the costs of selling are removed. The SBA SOP sets when an independent appraisal is required and which premise the file needs. We confirm the assignment with the lender before inspection, then report exactly what the credit calls for, with no premise quoted before we have seen the equipment.
- FMV: the going-concern number behind most 7(a) and 504 equipment financing.
- OLV: the advertised-sale value lenders use to test the collateral.
- NOLV: OLV net of the cost to sell, where the credit requires the downside.
- SOP-aligned: the assignment is scoped to the appraisal the SBA SOP expects.
- Reads like the bank reads it: Jesse Lukes came up inside the bank at BMO, originating loans and reviewing collateral, so the file reads the way a lender reads it.
Related work
Where SBA files connect.
An SBA appraisal often sits beside a wider lending engagement or a business sale. These are the assignments and specialties this work most serves.
Who orders it
The people who close the loan.
SBA lenders and business development officers order it to clear the collateral condition on a credit. Loan packagers and brokers order it to keep a file complete before it reaches underwriting. Certified Development Companies order it on the 504 side. And borrowers buying or refinancing equipment order it when their lender asks for an independent value. In every case the goal is the same: an appraisal the lender can rely on and the SBA will accept.
What you get
A complete report, not a printout.
You receive a written narrative of scope and methodology, an itemized appendix valuing each asset, and photographs from the inspection. The report is independent and certified, with senior review before it leaves. Cost, market and income approaches are applied by a certified appraiser, not a database.
- Narrative: scope, premise and methodology stated in plain terms.
- Itemized appendix: each asset identified, described and valued.
- Inspection photographs: the assets as they were on the day.
- Defensible: prepared to withstand lender, SBA, IRS, audit and legal review.
Common questions
Answers, up front.
Does the SBA require an equipment appraisal?
Often, yes. The SBA Standard Operating Procedure (SOP) sets the conditions under which an independent, third-party equipment appraisal is required, generally tied to the dollar amount and nature of the equipment being financed and whether the seller and buyer are related. Your lender applies the current SOP threshold to your specific credit. When an appraisal is required, it must be independent and USPAP-compliant. We scope each assignment to the SOP standard the lender is working to.
Who can perform an SBA equipment appraisal?
An independent, qualified appraiser with no interest in the transaction. The SBA SOP calls for a third party who is unrelated to the buyer, seller, lender and broker. Our appraisals are prepared by a NEBB-certified Machinery & Equipment Appraiser (CMEA) and follow USPAP. Jared Lukes is CEO and lead appraiser, and Jesse Lukes came up inside the bank at BMO, originating loans and reviewing collateral, so the file reads the way a lender reads it.
What is the difference between a 7(a) and a 504 loan?
A 7(a) loan is the SBA's general-purpose program, used for working capital, equipment, inventory and many acquisitions, funded through a participating lender. A 504 loan is a fixed-asset program, used to finance major equipment and real estate, funded jointly by a lender and a Certified Development Company. Both can require an independent equipment appraisal under the SOP. We report the value premise each program and credit calls for.
Will the appraisal satisfy the lender and the SBA?
Yes, that is the standard we build to. The report is independent, USPAP-compliant and scoped to the SBA SOP, with a clear statement of premise, methodology and the approaches applied. It is prepared to withstand lender, SBA, IRS, audit and legal review, and it goes through senior review before it leaves our office. If your lender has a specific SOP requirement or template field, tell us at intake and we scope to it.
Which value premise will my SBA appraisal use?
It depends on the credit. Most SBA equipment financing rests on Fair Market Value (FMV), the going-concern number for a borrower that will keep using the assets. When the lender wants the downside tested, the report also includes Orderly Liquidation Value (OLV) and, where required, Net Orderly Liquidation Value (NOLV), the OLV after selling costs. We confirm the premise with the lender before inspection and never quote a value before we have seen the equipment.