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SBA 504 Q&A: Appraisal Waivers
Q: When can a real estate appraisal requirement be waived for a Small Business Administration (SBA) 504 loan?
A: Under revised guidance for the 504 Loan Program in SOP 50 10 5(J) and (K), the SBA requires a real estate appraisal if the estimated value of the project property is greater than $500,000.
However, if the estimated value of the project property is $500,000 or less under the following circumstances, an appraisal must be obtained:
1) Equity in land owned for 2 years or more is being contributed as part of the borrower’s contribution;
2) The real estate is the third party lender’s OREO;
3) If the loan finances a transaction involving parties with a close relationship (e.g., transactions between existing owners or family members);
4) The seller of the property is carrying back a loan that is part of the borrower’s contribution; or
5) If the SBA or Certified Development Company otherwise concludes that an appraisal is necessary to appropriately evaluate creditworthiness.
If you have a question you’d like our SBA 504 loan experts to answer, email us at info@FloridaFirst.com or call 850.681.3601 or toll-free at 800.504.LOAN.