With the release of SOP 50 57 4 (7(a) Loan Servicing and Liquidation, effective November 1, 2025) the SBA sets forth updated policies and procedures for 7(a) loans in servicing or liquidation status.
Previously, many lenders focused on collateral (real estate, equipment, inventory) when managing defaulted 7(a) loans because the loan-servicing or liquidation guidance emphasized collateral recovery.
The updated SOP 50 57 4 emphasises prudent servicing and liquidation by lenders, and the SBA’s oversight now expects stronger analysis and documentation of value and recovery options. Starfield & Smith Attorneys at Law+1
This means that if an operating business may be sold as a going concern, the lender’s decision cannot rest solely on what collateral can be sold; it must also consider the business’s operational value.
That worked for businesses that had already closed their doors, but not for those still generating cash flow, maintaining customer contracts, or holding goodwill that could transfer to a buyer.
The SBA now acknowledges that an operating company may have going concern value that exceeds the sum of its tangible assets.
Under SOP 50 57 4, lenders are required to evaluate this possibility before proceeding with liquidation.
If the business is still operating and could be sold privately, a qualified, independent valuation is required to document a recovery strategy and protect both the lender and the SBA’s interests.
Section C of SOP 50 57 4 directs lenders to obtain a valuation “to assess whether a private sale of a going concern is in the best interest of the SBA and the lender.”
This requirement did not exist in prior SOP 50 57 3 guidance, which primarily referenced asset appraisals and left going-concern assessments to lender discretion.
Now, the expectation is clear: before a sale, SBA wants a valuation that examines operations, earnings, and market positioning, not just the balance sheet.
According to the SBA document listing, SOP 50 57 sets the policies and procedures for 7(a) loans that are “fully disbursed and are in ‘regular servicing’ or ‘liquidation’ status.” Small Business Administration
While the SOP does not publicly provide a checklist that explicitly uses the phrase “business valuation required for going concern sale,” the expectation throughout is that the lender acts in a commercially reasonable manner and documents decisions accordingly. For example, Chapter 3 emphasises lender responsibility and authority, and Chapter 6-12 include servicing and liquidation actions. www3.uwsp.edu+1
Lenders should consider ordering a business valuation when all of the following apply:
If the business has shut down and the only remaining option is to sell equipment and inventory, a standard collateral appraisal remains appropriate. But when operations continue, a going-concern valuation becomes the responsible path.
For an accurate, defensible valuation, the appraiser must receive more than just numbers. A proper business valuation isn’t just a financial analysis; it’s an understanding of why the business performs the way it does.
The following information is critical:
By providing this context, lenders enable the appraiser to assess not just the book value but the business value, which is essential for a going-concern scenario.
| Valuation Type | Assumes | Focus | Typical Use |
|---|---|---|---|
| Going Concern | Business continues operating | Cash flow, goodwill, marketability | Private sale or reorganization |
| Liquidation Value | Business ceases operations | Tangible asset value | Forced sale or shutdown |
For SBA recovery planning, a going-concern valuation can often demonstrate that a private sale offers higher recovery than an immediate liquidation, helping lenders make a commercially reasonable decision supported by documented evidence.
A defensible valuation depends on access to relevant, organized documentation.
To help lenders streamline the process, AMP created the SBA SOP 50 57 4 Business Valuation Request List (Free Download), an interactive checklist that outlines everything your appraiser may need, including:
This document helps lenders collect only what’s necessary while ensuring the valuation fully complies with SBA expectations.
SOP 50 57 4 7(a) Loan Servicing and Liquidation marks a shift in SBA’s approach, from focusing solely on liquidation to evaluating recovery through enterprise value.
For lenders, this means partnering with valuation professionals who understand both SBA compliance and the real-world drivers of small-business value.
At AMP Business Valuations, we’ve helped SBA lenders nationwide navigate this process with precise, defensible valuations that withstand scrutiny and support better recovery decisions.
Use our interactive checklist to streamline documentation for your next going-concern valuation.
Download the free checklist →