Short answer: SBA issued technical updates to SOP 50 10 8.1 on September 25, 2026, six days before the SOP took effect. One of them struck the word “borrower” from the quality of earnings independence clause. A buyer-commissioned QoE is no longer disqualified, but a lender may not rely on it without a review by one of the lender’s own approved vendors, and those review findings must be retained in the loan file with the original report. The business valuation received no equivalent change.
What the clause said, and what it says now
The version of SOP 50 10 8.1 published in August read:
As the QoE is part of the financial due diligence of the transaction, the report may not be prepared by or for the borrower or seller.
Read plainly, that disqualified a report the buyer had commissioned for its own diligence. On a $3 million-plus acquisition, a buyer who had already paid for a quality of earnings report would have needed a second one before the bank could close. The technical update removed one word. The operative clause now reads:
As the QoE report is part of the financial due diligence of the transaction, the report must not be prepared by or for the seller.
The seller bar survived, and in firmer language — “may not” became “must not.” A sell-side quality of earnings still cannot be used by the lender, however good it is. What changed is the buy side.
The vendor review is the condition, not an option
The update does not simply let a buyer’s report into the credit file. It adds two sentences:
Recognizing that some Applicant buyers may elect to commission their own QoE prior to engaging with the Lender for financing as part of their own due diligence, Lenders may elect to have that report reviewed by one of their approved vendors to help mitigate costs. The findings of that vendor review must be included in the loan file along with the original QoE report.
The Lender may not rely upon a QoE report prepared by another party without a review being performed by one of their vendors.
Two details matter in practice. The reviewer must be one of the lender’s vendors, not a second firm the buyer selects. And the review is not discretionary — the permissive “may elect” in the first passage describes the cost-saving route, while the second passage states the prohibition. A lender that accepts a buyer’s report without any review has no path to rely on it.
The rest of the independence language is unchanged. The QoE “must be performed by an independent, experienced financial professional and must be conducted for the benefit of the Lender.” A report a buyer generated itself, without a named professional standing behind the conclusions, does not become compliant because a reviewer looked at it. See who can prepare an SBA quality of earnings report for how the arrangements compare.
There is no reliance letter for a QoE
A widely repeated summary of the update says lenders can use a buyer’s report if they put a reliance letter in place or obtain a secondary review. The first half is not in the SOP. In SOP 50 10, “Reliance Letter” is a defined environmental term — SBA’s standard letter at Appendix 5, which accompanies Transaction Screens and Phase I and Phase II environmental site assessments, and whose language “may not be modified.” It has no application to financial due diligence. The vendor review is the only stated route, and the two are not alternatives.
What did not change
Everything structural survived the update. The QoE is mandatory where the Purchase Price is $3 million or more on Initial Acquisition and Business Expansion transactions, measured before buyer equity, seller debt or other financing. Owner Buyout and ESOP & Cooperative transactions remain exempt. The report must still include a Cash Proof reconciling bank statement data to the income statement and tax return on a trailing twelve-month basis and for the last two fiscal years. The lender must still use the QoE earnings in the debt service coverage determination and retain the report in the credit file, and if coverage does not support the valuation and debt structure, the loan amount must be reduced.
One small addition: if the acquired business has been operating for less than two years, the Cash Proof scope “can be reduced accordingly.” The full requirement is set out in the SBA quality of earnings requirement.
The business valuation got no relief at all
This is the part most summaries have missed. The valuation independence rule is untouched:
For the individual performing the business valuation to identify the scope of work appropriately, the business valuation must be requested by and prepared for the Lender. The Lender may not use a business valuation prepared for the Applicant or the seller.
No word was struck, no vendor-review bridge was added, and there is no dollar threshold — the old $250,000 lender self-valuation tier is gone, so every change of ownership needs a lender-ordered valuation from a Qualified Source holding an ASA, CBA, ABV, CVA or BCA credential. A buyer’s valuation is unusable with no route to fix it. The asymmetry is now the sharper constraint: a buyer’s QoE can travel to the lender, and a buyer’s valuation cannot.
The update also adds an explicit verification step: the lender “must obtain a copy of the financial information relied upon by the individual who performed the business valuation and verify that information against the seller’s IRS transcripts.”
What to settle before the first file
Three decisions, and they are procedural rather than credit judgments. Name the vendors permitted to perform a QoE review, since the SOP requires the reviewer to be yours. Define what the review has to cover and what the written findings look like, because they are going in the loan file next to a report you did not commission. And decide how a reviewed buyer report feeds debt service coverage when the reviewer disagrees with the buyer’s adjusted earnings figure — the SOP requires you to use the QoE earnings, which makes the reconciliation of that disagreement the operative number. The SBA lender checklist for October 1 covers the rest of the workflow.
The governing SOP is fixed by the date SBA assigns the loan number, not the application date. Full background on the regulation is in our SOP 50 10 8.1 reference.
How QoEAgent fits
We are engaged by the party commissioning the work and the conclusions are signed, which is what the SOP asks for on a lender-ordered QoE. We also perform the vendor review the update now requires when a lender wants to use a buyer’s report rather than pay for the analysis twice. Our founders hold the CFA, ASA and CPA/ABV credentials, and the ASA and ABV are both on SBA’s Qualified Source list for the business valuation.
Sources
U.S. Small Business Administration, SOP 50 10 8.1 as revised by Technical Policy Updates effective October 1, 2026; SBA Information Notice 5000-882227, Issuance of Technical Updates to SOP 50 10 8.1; SBA Information Notice 5000-880695. All passages above are quoted from the SOP text.