Quality of Earnings for SBA Lenders, SOP 50 10 8.1

Q: What does SBA SOP 50 10 8.1 require for Quality of Earnings reports?

Since October 1, 2026, for Initial Acquisition and Business Expansion loans where the business purchase price is $3 million or more, the lender needs a Quality of Earnings report from an independent financial professional engaged by, and acting on behalf of, the lender. The report supplements the business valuation.

Q: How many Quality of Earnings engagements does Tonnesen Accounting Services do?

About 40 a month, and more than 600 completed, most of them SBA-sized acquisitions.

Updated October 6, 2026

What SOP 50 10 8.1 requires

SBA SOP 50 10 8.1 took effect October 1, 2026. For Initial Acquisition and Business Expansion loans where the business purchase price is $3 million or more, the lender needs a Quality of Earnings report from an independent financial professional engaged by, and acting on behalf of, the lender.

The threshold is the purchase price in the purchase and sale agreement, less owner-occupied real estate at appraised value. Financing carried back by the business owner and the buyer's equity injection are not deducted.
Partner and owner buyouts, and ESOP or cooperative conversions, fall outside the requirement.
The report supplements the business valuation. It does not replace it.
Below $3 million a lender can still require one, and many do when there are heavy add-backs, weak bookkeeping or customer concentration.

This is a summary. The SOP itself is the controlling document. Our articles go further on the requirement, how the $3 million threshold is measured, who chooses the provider and what to check before commissioning one.

Where the SOP items sit in our report

What lenders look for	Where it is in our report
Proof of cash	Cash proof and bank statement reconciliation: balance sheet cash tied to bank statement ending balances for the last two fiscal years and the trailing twelve months, with deposits and withdrawals compared to reported revenue and expenses
Reconciliation to filed returns and IRS transcript data	Tax return reconciliation: three years of filed returns and IRS transcripts, with book to tax differences explained
Documented add-backs	Documented add-backs and adjustments, with the supporting detail for the adjustments
Revenue quality and customer concentration	Customer analysis, and trend and margin analysis
Whether earnings hold after the sale	Customer analysis, risks and opportunities summary, and a five-year monthly projection model
Working capital	Working capital analysis for the transaction

How we work with lenders

Engagement. When a lender engages us, the lender is our client and the report is prepared for the lender.
Fee. $7,500 flat for deals of $10 million and under, the same scope and fee as a buyer engagement. Larger or more complex transactions are scoped after a call. See pricing.
Timing. Generally two to four weeks from the day we have the documents. We send the company our request list at the start and flag slow document production early.
Communication. We keep the lender and the broker informed during the engagement rather than going quiet until the report is done.
Review. The work is completed and reviewed in-house by our CPA-led team.
Before you engage. A sample report and a one-page overview of our process are available on request.

Questions lenders ask

Can a report the buyer already ordered satisfy the requirement?

The SOP calls for a provider engaged by and acting on behalf of the lender. If a buyer has already engaged us on the same deal, talk to us early about how your institution wants that handled.

How many of these do you do?

About 40 Quality of Earnings engagements a month, and more than 600 completed, most of them SBA-sized acquisitions.

Do you work with lenders outside Florida?

Yes. The work is done remotely for lenders and buyers across the United States.

Request a sample report