The QoE You Already Paid For May Not Count

From 1 October 2026, SBA lenders must obtain their own quality of earnings report on 7(a) acquisitions at $3 million or more, and the rule turns on who the report was prepared for. A report you commissioned can still reach the lender's file, but only through a vendor the lender approves.

If you are buying a business at $3 million or more with a 7(a) loan, and you have already paid for your own quality of earnings report, there is a paragraph in the new SBA rules you should read before you budget the rest of the deal.

It does not say your report is bad. It says it was written for the wrong person.

That rule takes effect on 1 October 2026, and it is the paragraph that decides whether you pay for one report or two.

What the rule says

SOP 50 10 8.1 was issued on 14 August 2026 and applies to loans receiving an SBA number on or after 1 October 2026. Information Notice 5000-880695 carries it.

The operative sentence is short:

"For Business Expansion and Initial Acquisition transactions where the Purchase Price as defined in Paragraph A.1 is equal to or greater than $3 million, the Lender must also obtain a Quality of Earnings (QoE) in addition to the required Business Valuation."

The Lender must obtain it. Not the buyer, not the seller, not the broker.

Then the independence clause, which is the one that catches people:

"The QoE must be performed by an independent, experienced financial professional and must be conducted for the benefit of the Lender. 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."

A report prepared for the borrower does not satisfy that clause on its own. Searcher, strategic buyer, family office, it does not matter, and nor does how good the work was.

Three details worth having straight, because they change who this applies to.

The $3 million is the business price, measured before your money. The SOP: "The $3 million threshold is determined before the application of buyer equity, seller debt, or other financing sources." So a $3.4 million business bought with $1 million down is a $3.4 million deal for this test, not a $2.4 million one.

Real estate comes out first. "The Business Purchase Price excludes all owner-occupied commercial real estate assets being acquired in the transaction." Where property is part of the deal, the lender removes the appraised value of the real estate from the purchase and sale agreement price, and tests what is left. A $3.6 million deal with $900,000 of building in it is a $2.7 million business, and the mandate does not attach.

Owner buyouts are exempt. The SOP excludes Owner Buyout and ESOP and Cooperative transactions, and it says why: "the existing owner(s) retain operational knowledge of the business and the transaction does not result in a change to the management or operating structure." The rule is aimed at the information gap between a departing seller and a buyer who has never run the business. An owner buying out a partner does not have that gap.

Who may prepare it

Who commissioned the report	Satisfies the mandate?	What it is still good for
The lender	Yes. This is the only version that goes in the credit file.	Everything below, plus the debt service coverage calculation.
The buyer, before or after the LOI	Not on its own. Prepared for the borrower, though a review by a vendor the lender approves can carry it into the file.	Price negotiation, walking away, structuring the offer, briefing your own lender. A great deal, just not this.
The seller, sell-side	No. Prepared for the seller, and prepared to present the business.	Getting your data room straight and finding what a buyer will flag. Useful. Not this.
The broker or the M&A advisor	No. Prepared for a party to the transaction.	Positioning the deal.
The buyer's own CPA	No, if the engagement is for the buyer. The test is who it was prepared for, not who prepared it.	Tax and structuring work, which is a different job.

The SBA is buying independence, not analysis. The lender is about to guarantee debt against an earnings figure. It wants that figure produced by someone with no stake in the deal closing.

What the text says, and what SBA said out loud

A version has been circulating that a buyer-ordered report will be accepted if the lender's vendor-management firm reviews it. That phrase is not in the rulebook. "Vendor management" appears zero times in SOP 50 10 8.1, across all 149,413 words of it.

Then SBA answered the question directly, on the record.

On 26 August 2026 the Office of Capital Access ran a training session on Appendix 15, the second of three held that week. It is public, on SBA's own channel, and the presenter noted almost five thousand people were on the call. On buyer-commissioned reports, SBA said this:

"So say you have a buyer who engages as part of some of their initial diligence their own independent QoE. We're not prohibiting the lender from using that report as part of their diligence. However, it has to be reviewed by one of their approved vendors and it can be incorporated into their report. So whether that's a reliance letter."

And that SBA intends to write it down: "There's some flexibility that we'll be adding and clarifying in the tech update."

So the route exists, and it is not yet in the rulebook. The SOP uses the term reliance letter eleven times, and every one of them concerns environmental reports under Appendix 5, not earnings. Until the technical update publishes, a credit team reading only the SOP is entitled to say no.

Which makes the practical position narrower than either extreme. Your report is not automatically dead, and it is not automatically accepted. It reaches the lender's file only if that lender is willing to put it through a vendor they approve. Ask them before you commission anything else.

One more thing from the same session, because it cuts harder than the written rule does. On independence, SBA said the provider "cannot be affiliated in any way with any advisory firm on either buy side or sell side or any agent involved," and that this means "not just the division handling the transaction, it is any affiliation whatsoever." The written rule asks who the report was prepared for. The spoken rule asks who you are connected to at all.

What a buyer-ordered report is still worth

If you have already written the check, this is the part that matters.

Your report is not wasted. It was doing a different job.

A buy-side QoE exists to stop you overpaying and to tell you whether to walk. It answers questions the lender's report will not even ask, because the lender is underwriting a loan and you are buying a company. Customer concentration that makes you nervous. A key employee with no contract. Whether the owner's relationships walk out the door with him. A lender cares about those only insofar as they move coverage. You care because you run the place on Monday.

The lender-ordered report has one narrow job: produce an earnings figure the bank can underwrite. The SOP is explicit that the lender "must use the report's findings to calculate the Debt Service Coverage," and that "if that Debt Service Coverage does not support the business valuation and proposed debt structure, the loan amount must be reduced accordingly."

Your number and the bank's number answer different questions, for different people, at different risk.

The QoE now sits inside the equity math, not only the coverage math. The SOP allows additional equity sources "when additional funds are required to supplement the purchase when the sales price exceeds the value supported by the Business Valuation and Quality of Earnings report," and requires those funds to be on full standby. A report that lands below the price does not just shrink the loan. It can force more of your own cash into the deal, locked up for the term.

What happens when two reports disagree

On one roll-up we ran the sell-side work while a national firm ran the buy-side on the same practices. The two numbers landed close together. That is the good outcome, and it is not the only one available.

When two competent firms do land apart, the cause is almost never arithmetic. It is scope and standard of proof: one firm accepts an add-back on management's explanation, the other requires the invoice. One normalizes owner compensation to a survey; the other to what the replacement was actually paid. Both are defensible. They produce different EBITDA.

Which is the practical argument for getting your buy-side work and the lender's report onto the same evidentiary footing early. When our number and the bank's number are built from the same documents and the same standard of proof, the gap closes to something explainable. When they are not, you spend the last two weeks before closing reconciling two spreadsheets instead of planning the first hundred days.

The add-back we strike most often is not the country club membership or the truck. It is the one-time consulting fee that appears in all three years. Nobody is lying. They just never had a reason to look.

When to order, and who picks

Order early. The report is now on the closing critical path. The lender cannot finish underwriting without it.

Who selects the provider is the lender's call, since the engagement is for their benefit. In practice most lenders will take a recommendation, particularly if the firm has been through their approval process. If you have a provider you trust, say so early. Ask the lender what their credit team requires and whether they keep a panel. That conversation costs nothing now and a great deal in the week before closing.

What could still change

As of 30 August 2026. We review this quarterly and will date any update.

Three things are genuinely unsettled.

Whether the technical update matches what was said. SBA has stated that a buyer's report can reach the file through an approved-vendor review, and that the flexibility will be added in a technical update. Until that publishes, the written rule and the spoken rule do not match, and a lender is entitled to follow the written one. SBA is holding open office hours on 2 and 10 September, which is where more of this is settled.

How individual credit teams apply it. The SOP sets a floor. Banks build their own overlays, and some will be stricter about scope, provider approval and independence than the text requires. The rule you read and the rule your bank enforces may be different documents.

Whether SBA issues further notices before October. The SOP was published on 14 August for an effective date of 1 October. Six weeks is a short runway for a program this size, and lender feedback is still arriving.

If you are working a deal that funds after 1 October, the safe assumption is the text as written. The expensive assumption is that a report you commissioned will be accepted because it was thorough.

Questions we get

I already paid for a QoE. Do I have to buy another one? If your deal is an Initial Acquisition or Business Expansion, the business purchase price is $3 million or more, and it funds on or after 1 October, then the lender must obtain a report for its own benefit. That does not automatically mean starting over. SBA said in its 26 August training that a lender may use a buyer's report where one of the lender's approved vendors reviews it and incorporates it, so ask your lender whether they will do that before you commission anything else.

Does my sell-side report count? No. A sell-side report is prepared for the seller, which is the specific thing the SOP excludes. It is still worth having. It shortens the buyer's work and it tells you what will be found before someone else finds it.

Who picks the provider, me or the bank? The bank, because the engagement is for their benefit. Most will consider a recommendation. Ask early whether they keep an approved list.

What if the purchase price is just under $3 million? Then the mandate does not attach, and financial due diligence is still required on every change of ownership transaction. Remember that the threshold is measured before your equity and any seller note, and that owner-occupied real estate comes out at appraised value first. Deals land on the wrong side of $3 million more often than people expect.

When should the report be ordered? As early as the lender will allow. It feeds the debt service coverage calculation, so underwriting cannot finish without it, and on a tight timeline it is the item that moves the closing date.

Working out how to apply this? If you are a lender deciding what to require, or a buyer with a report in hand and a lender who has not seen it yet, we will get on a call and go through scope. No charge and no pitch. You can read a full sample report first, no form and no email required: the Light report.

Ryan Anoskey is a CPA and a partner at LIMESTONE Strategic Partners. He has run roughly a hundred quality of earnings engagements, buy-side and sell-side, across manufacturing, healthcare, contracting and multi-site roll-ups.

Sources: SBA SOP 50 10 8.1, Appendix 15 (issued 14 August 2026, effective 1 October 2026); SBA Information Notice 5000-880695. Rule claims in this article were checked against the full SOP text and against SBA's Appendix 15 training session of 26 August 2026.