An SBA Lender's Checklist for Commissioning a Compliant QoE

Updated October 6, 2026. SBA SOP 50 10 8.1 took effect on October 1, 2026, and this article reflects the rule as it now applies.

Most of the commentary on SOP 50 10 8.1 has been written for buyers. The party with the actual process change is the lender, and since October 1, 2026 it is no longer optional.

The requirement is short. On initial acquisition and business expansion loans with a business purchase price of $3 million or more, an independent financial professional engaged by and acting on behalf of the lender must produce a Quality of Earnings report. It supplements the business valuation rather than replacing it.

Everything below is what that requirement turns into operationally.

1. Fix who the engagement letter runs to

This is the change that invalidates existing practice. If your borrowers have been commissioning QoE reports and handing them to you, those engagements do not satisfy the requirement now that the rule is in effect.

The engagement letter needs to name the lender as the client. Not as an additional recipient, not as an intended user of a report the borrower ordered. The client.

Decide now whether you want a master services agreement with each provider you use, or a per-deal engagement letter. A master agreement is less friction per transaction and worth setting up in advance if you expect volume.

2. Decide who pays and put it in the fee letter

The rule governs who the report is for, not whose money funds it. In practice the borrower funds it alongside the appraisal and valuation. That should appear in your fee letter and in the borrower conversation early, because it is a real number added to closing costs and buyers who hear about it late get frustrated at exactly the wrong moment.

3. Write down a minimum scope

An approved provider list without a defined scope is not much protection. Two firms can both call their deliverable a Quality of Earnings report and do very different amounts of work.

At a minimum, require:

• Proof of cash. Reported revenue tied to bank deposits. This is the procedure most commonly skipped and the one that catches the most.
• Reconciliation to filed tax returns and IRS transcript data, not just to the internal books.
• Every add-back tested against source documents, not against the seller's description of them.
• Related-party transactions identified and adjusted, with market rates stated as separate assumptions rather than netted into one line.
• Revenue quality, customer concentration and post-close margin sustainability addressed explicitly.
• A trailing twelve month view, not just fiscal years. A deal closing in September should not be underwritten off last December.

4. Order it early

The most common way this requirement delays closings has nothing to do with the analysis. It is ordering the report at underwriting instead of shortly after LOI.

Commissioned early, a QoE runs in parallel with everything else and costs you nothing in calendar time. Commissioned at underwriting, it sits on the critical path, and any document delay at the company becomes a delay in your closing.

Build the trigger into your process at the point the deal is accepted, not at the point the file is assembled.

5. Vet providers on things that are checkable

The SOP asks for an independent financial professional and does not define credentials, which leaves the quality question with you. Useful questions:

• How many engagements do you complete a month, and how many have you done in total?
• Is the work done in house or outsourced, and who reviews it before it is issued?
• What is your standard turnaround from complete document receipt?
• Is the fee flat, or does it move when the books turn out to be messy?
• Can we see a redacted sample report?
• Do you pay referral fees to lenders or individuals for engagements?

That last one matters more than it looks. If a provider is paying to be on a list, the borrower is funding that fee and the incentive points away from scrutiny.

6. Decide your position on same-firm QoE and valuation

The SOP treats these as separate deliverables and does not prohibit one firm from doing both. Whether you want that is your call. Some lenders like the efficiency and the single point of contact, some want independent eyes on each. What matters is that you have a position rather than deciding it deal by deal under time pressure.

7. Document the file

Keep the engagement letter showing the lender as client, the provider's independence representation, the report itself, and a short credit memo note on how findings were addressed in underwriting. If the report identified a material adjustment and the deal proceeded, the file should show why.

8. Brief your BDOs and your referral sources

Brokers and buyers are asking about this on deals over $3 million now that the rule is in effect. The lenders who handle it smoothly will be the ones whose front line can answer in one sentence: we order it, here is roughly what it costs, here is when it happens, here is who does it.

That answer is also a competitive advantage for a while. A borrower choosing between two banks will notice which one has this figured out.

A note on what this is actually fixing

A business valuation takes reported earnings as given. A credit review tests whether cash flow covers debt service, using the financials the borrower supplied. Neither goes behind the numbers.

When earnings are overstated, the valuation was built on a figure that was never there and the coverage ratio was calculated on the same figure. Both look fine. That is the gap this requirement closes, and it is worth remembering when the extra step feels like friction.