Be Prepared
SBA 504 Appraisal Requirements
When Needed:
- SBA Requires a real estate appraisal if the estimated value of the property is $500,000 or higher
Intended Users of the Appraisal:
- You, the lender, may be identified as the client and U.S. Small Business Administration (SBA) must be an intended user.
- Capital Matrix may also be identified as the client or an intended user.
- SBA will not accept reliance letters in lieu of being named in the appraisal.
The appraiser must be:
- Independent
- State-Licensed or State-Certified. When the property's estimated value is over $1,000,000 the appraiser must be State-Certified.
Appraisal:
- Prepared in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP)
- Dated no more than 12 months prior to the SBA application
- Must utilize at least two of the three approaches to value, including the sales approach
- Must value to 95% of total project cost, otherwise additional equity injection is required
- No restricted appraisals, must be a self-contained or summary report
- Intangible assets will not be included in value
- If equity in land is being contributed, appraisal is required if owned for 2 years or more, otherwise cost is used
- Required to be submitted with the application if not an arms-length transaction