An SBA Lender Checklist for October 1

Short answer: From October 1, 2026, SOP 50 10 8.1 requires a full quality of earnings (QoE) report on SBA 7(a) Initial Acquisitions and Business Expansions with a purchase price of $3 million or more. A cash proof is one required part of that report, not the whole of it. The QoE also has to normalize earnings, document every add-back, assess the revenue base, and give the lender an earnings figure it must use for debt service coverage.

Updated October 1, 2026. SBA’s September 25 technical update narrowed the quality of earnings independence clause. Read what changed and what it means for a lender’s file.

The underlying rule is set out on our SBA quality of earnings page.

This is a workflow change more than a documentation change. Here is what we would want settled before the date, in the order the questions come up.

Seven things to settle

1. Flag the pipeline. Which deals in process will receive a loan number on or after October 1, and which of those are Initial Acquisitions or Business Expansions with a purchase price, as the SOP defines it, of $3 million or more? The threshold is measured before buyer equity, seller debt or other financing. Owner Buyout and ESOP & Cooperative transactions are exempt. Treat anything close to the line as in scope.
2. Decide who commissions the report. The SOP states that the QoE “must be conducted for the benefit of the Lender” and “must not be prepared by or for the seller.” The technical update effective October 1, 2026 narrowed that clause, striking the word “borrower,” so a buyer-commissioned report is no longer disqualified on its face. It still cannot be accepted as-is: the SOP states the Lender “may not rely upon a QoE report prepared by another party without a review being performed by one of their vendors,” and the review findings must be filed with the original report. Decide now which of your approved vendors can perform that review, and write both rules into your procedures rather than deciding deal by deal. A report the buyer already commissioned cannot be re-addressed to the bank.
3. Decide who pays, and say so in the term sheet. The requirement to obtain the report and the question of who bears the cost are separate. Settling the second one in writing avoids a negotiation in week four.
4. Wire the QoE earnings into the debt service coverage calculation. Credit memo templates that currently pull the seller’s adjusted EBITDA need to pull the QoE figure instead. This is the change most likely to be missed, because it lives in a spreadsheet rather than a policy document.
5. Build the timeline into the process. Decide where in the sequence the QoE is ordered. Ordering the cash proof first gives underwriting an early read on whether reported revenue holds up before the rest of the analysis is finished.
6. Set the information request early. Bank statements for every account covering the trailing twelve months and the last two fiscal years, the general ledger export and trial balance, accountant-prepared financial statements, federal tax returns, IRS transcript data, owner compensation and related-party detail, revenue by customer, key contracts, and merchant processor settlement detail if the business takes cards. The most common cause of a slipped timeline is waiting on records, not the analysis.
7. Agree what an exception means. A QoE that returns findings is doing its job. Decide in advance how the credit process treats an unresolved variance or a rejected add-back, so the first one does not stall a file.

What the full QoE must contain

Appendix 15 of SOP 50 10 8.1 sets out the contents. The report must:

• Reconcile the sources. Tie the accountant-prepared financial statements, tax returns, internal financial statements and IRS transcript data to a normalized, adjusted earnings figure that reflects recurring, arm’s-length operations.
• Include a cash proof. Reconstruct cash receipts and disbursements by reconciling bank statement data to the income statement and tax return, on a trailing twelve-month basis and for the last two fiscal years. What an SBA cash proof must contain covers this piece in detail.
• Document every add-back. Non-recurring revenue or expenses, above- or below-market owner compensation, related-party transactions, deferred maintenance, and cash-basis versus accrual-basis differences.
• Assess the revenue base. Customer concentration, contract continuity, and whether existing revenue and margins are likely to hold after the sale.
• Give the lender a usable earnings figure. The lender must use the QoE earnings in the debt service coverage calculation and keep the report in the credit file.

Two things worth knowing about the businesses this applies to. Their records are usually scans rather than exports, and they usually have more bank accounts than anyone expects. Both push the preparation work up and neither is a reason to sample.

Where the loan amount can move

The consequential change is not the report itself. It is that the lender must use the report’s earnings figure, and if that coverage does not support the valuation and proposed debt structure, the SOP requires the loan amount to be reduced. If a seller has proposed add-backs that do not survive the normalization, coverage falls and the supportable loan falls with it. That conversation is better had in underwriting than at closing.

How QoEAgent delivers the full SBA QoE

QoEAgent is an independent financial due diligence firm engaged for the lender’s benefit, not a self-service tool a borrower runs. Our SBA engagements are scoped to the full Appendix 15 requirement, built on three layers of the same work:

• Proof of cash: bank statements reconciled to the income statement and tax return for the trailing twelve months and the last two fiscal years. We return a complete proof of cash within 24 hours of data ingestion.
• GAAP-formatted financials: classified monthly and annual income statements and balance sheets, reported EBITDA, and a statement of cash flows for the same periods, within 48 hours.
• QoE Essentials, the full quality of earnings: the normalized EBITDA schedule with every add-back documented, working capital and operating cycle analysis, customer concentration, and a change-of-control review of key contracts, delivered as a databook the lender can drop into its debt service coverage calculation.

We have updated our data request list for SOP 50 10 8.1 and built a client portal to run lender engagements at volume. Josh Cashman (CFA, ASA) and Ron Neufeld (CPA, ABV) stand behind the conclusions, and every figure traces back to the bank statement line and general ledger entry behind it. See who can prepare an SBA quality of earnings report, how lender QoE differs from M&A QoE, and what a quality of earnings costs.

If you are sequencing this into your underwriting before October 1, get in touch.

This is a summary of SOP 50 10 8.1 for planning purposes, not legal or lending advice.