What Happens After You Order an SBA Business Valuation

A Practical Guide for SBA Lenders

So, you have just sent over the financial documents and all other collateral on hand to the valuation company to get your valuation done for you. So now what? This article walks through what happens once we receive the file and gives a look behind the curtain at how the process actually works.

Published: April 14, 2026

Our firm has a guaranteed 5 business day turnaround time, so we move into what I’d call “be quick, but don’t hurry” mode. The first thing we will do is a 30,000-foot flyover and make sure we have the minimum necessary to get started. This includes the four years of financials and a purchase agreement. Anything extra we get beyond that is even better.

We will then check each year of the financials to make sure that the file name matches what is actually in the file. It is not uncommon for file names to be misleading. A file may be labeled “2023 tax returns,” but when opened, it turns out to be 2022 or 2024.

We will then perform a thorough reading of the purchase agreement. Sometimes we have a full-blown airtight purchase agreement where the details of the sale are clearly spelled out. But other times, we will only have an LOI or, in some cases, nothing at all. Perhaps the buyer is wanting a valuation before submitting an offer. Sometimes the buyer AND seller are waiting on a valuation to set the purchase price.

This alone can slow things down.

Some purchase agreements are largely boilerplate where things are not always spelled out. Some LOI fall into the same category. If we operate with only this, we will assume the business is sold in an asset sale unless told otherwise. Ultimately, we will have to go back to the bank and ask for clarification of their understanding of the transaction.

Once we have a clear understanding of the terms of the sale, we will begin the number crunching portion of the process. Some firms might use valuation software. There is nothing wrong with that, but we have felt that software programs are too inflexible for SBA transactions. We have built our own models and use those to go through the calculations.

Once we have input all of the financials, we will look for possible normalization adjustments. This is not the article to get into the weeds of normalization adjustments, but we will say these are the items we pay closest attention to:

• Officer Compensation
• Non-owner Payroll Expenses
• Rent Expense
• Other Operating Expenses

The next step in the process is to pull peer group data. Comparing a company’s financial performance to peer group data is an important part of the process. It provides context around how the business is operating relative to similar companies, particularly with respect to margins, expenses, and overall profitability.

If results fall outside typical ranges, it helps identify areas that need to be explained.

Common sources for this type of data include platforms such as Vertical IQ, IBISWorld, and other industry research databases that compile financial benchmarks by industry.

At this point, we will have enough information to know if we have a valuation problem where the business is not going to meet the purchase price. We will usually alert the bank that there could be a problem. Sometimes there is information that is not readily apparent that might have an impact on the valuation. This is why a credit write up or even a simple note from the lender can be extremely helpful.

Once that is completed, we will go to pull market transactions. There are a handful of databases that track Main Street business transactions. Transaction data for Main Street businesses is pulled from several different databases, each with its own strengths and limitations. Common sources include DealStats, BizComps, and PeerComps (the one we use), among others.

These databases provide real-world transaction data that is used to develop valuation multiples, but coverage can be limited depending on the industry and size of the business.

While everything is case by case, we try to aggregate over 100 transactions and then filter that list down to 15 to 25 transactions that most closely mirror the business being valued. Often, that means expanding the industry sector to get a valid sample size.

From there, we will pull our cost of capital data and develop a Company Specific Risk Premium. This is used in the income approach. The cost of capital is built using a combination of market data and third-party sources. Common sources come from Duff & Phelps (now Kroll), Ibbotson data published by Morningstar, and datasets available through Business Valuation Resources, including the Damodaran data series. These sources provide benchmarks for market returns, risk premiums, and size adjustments.
From there, the rate is adjusted based on the specific risks of the company.

The general market data doesn’t tell the whole story. Every business has its own set of risks. This step is where we account for things like how dependent the business is on the owner, whether a few customers make up most of the revenue, and how consistent the results have been. It helps make sure the valuation reflects the actual business, not just an average. This will give us the information needed to complete the income approach.

From there, the focus shifts from gathering information to pulling everything together into a final conclusion.

At that point, we typically have everything we need to begin writing the report.

If you would prefer a printable version, you can download the PDF here: [Download PDF]

Lance LeBlanc, C.V.A., is the President of Green Country Business Valuations, a firm specializing in SBA business valuations for lenders across the country. He has completed thousands of valuations and works closely with processors, underwriters, and lenders to support them through the underwriting process.