The Small Business Administration said Thursday that it is postponing a plan to cap the amount of goodwill a lender can finance in the purchase of a small business.
The agency said it will suspend the cap for six months while it reviews individual transactions before issuing a final ruling. In guidance last month, the SBA capped goodwill valuations at $250,000.
But it suspended the cap after criticism from lenders and small businesses. The cap was to have taken effect March 1.
The SBA argued in a press release that goodwill — the difference between what a buyer pays for a business and the book or fair market value of the assets — is one of "riskiest assets that can be financed." Critics say it constitutes a big portion of certain kinds of small business, such as veterinary practices.
The agency said it will consider loan applications that include goodwill financing of more than $250,000 on a case-by-case basis until Aug. 31.