New SBA Rules Starting October 1, 2026

You’ve heard it said, “Help me help you.”

And no, I’m not talking about the time when you’re locked out of your email, and the only way back in is by having a password sent to the exact email you’re locked out of.

I’m talking about Quality of Earnings (QOE) and why a Quality of Earnings report can actually be valuable for everyone involved in buying or selling a business.

In many cases, it truly helps me help you.

In the SBA’s recent release, SOP 50 10 8.1, one of the new requirements addresses certain business acquisitions and expansions involving a business purchase price of $3 million or more. Under the new rules taking effect October 1, 2026, the lender must obtain a Quality of Earnings analysis from an independent firm.

If you’re buying or selling a business at this level, that’s a pretty significant change.

The next question you might have is:

“Isn’t that expensive?”

That’s an excellent question.

Thank you for asking.

Yes, it is.

However, let me offer three reasons why I think this is actually good news.

As a buyer purchasing a business at this level, you want assurance that what you’re stepping into is as strong as it appears on the surface.

You’ve looked at the business from every angle.

You’ve reviewed the financials. You’ve done your due diligence. You’ve talked through the operations. You’ve looked at the customers, employees, expenses, and opportunities.

And as far as you can tell, everything checks out.

Wouldn’t it be great if an independent advisor came to the exact same conclusion?

That’s where a Quality of Earnings report can provide real value to a business buyer.

A QOE provides an independent analysis of the company’s earnings and helps determine whether the financial performance you’re relying on is accurate, recurring, and sustainable.

In other words:

Are the earnings really what they appear to be?

That matters when you’re making a multimillion-dollar investment.

A QOE gives you another piece of independent evidence to support what you’ve already found through your due diligence. And if the report confirms the quality of the company’s earnings, it can give you even greater confidence that the business is financially sound and that you should continue moving forward with the acquisition.

Nobody can eliminate risk from buying a business.

But good due diligence can help you understand the risk you’re taking.

And that’s valuable.

As a seller, coming to the table with clean, well-organized financials is already a huge advantage.

Your financials don’t have to be perfect.

They need to accurately represent the performance of the business and withstand scrutiny.

When an independent QOE validates the quality of those earnings, it gives you another layer of confidence in the value of your business—and another piece of evidence supporting the business valuation and asking price your broker has established.

That’s important because one of the biggest questions in any business sale is:

“How did you arrive at that value?”

A strong Quality of Earnings report doesn’t replace a business valuation. The two serve different purposes.

But when the earnings supporting the valuation have been independently analyzed and validated, you have a much stronger story to tell.

A QOE can also help identify potential issues before they become problems later in the transaction.

And that matters.

The more questions you can answer before a buyer asks them, the smoother the business sale can be.

In other words, a QOE can help you walk into the market prepared rather than waiting for a buyer, lender, or due diligence team to uncover something you weren’t expecting.

That’s good for the seller.

And frankly, it’s good for the buyer, too.

The reality is that businesses fail.

The last thing anyone wants is for someone to take out a $3 million SBA loan to purchase a business, only to have that business fail five years later because a core earnings metric was misunderstood, overstated, or overlooked.

That hurts everyone. The buyer. The seller. The employees. The community. And the bank.

A Quality of Earnings report doesn’t eliminate the possibility that a business could struggle after an acquisition. No report can do that.

But it can help identify financial risks before the transaction closes.

And that’s why I think a QOE for a business sale is a good idea regardless of deal size—and especially for transactions of this magnitude.

At its core, the SBA’s new requirement is about reducing risk and increasing confidence in business acquisitions.

It helps ensure that, to the best of everyone’s ability, the business being purchased has the financial foundation to not only survive under new ownership but thrive.

So, yes, having a Quality of Earnings report may seem “extra.”

At times, it may even seem “unnecessary.”

And yes, it costs money.

But when you’re buying or selling a business worth millions of dollars, the cost of gaining greater certainty is worth considering.

Because when you look at the bigger picture, it’s really about helping the lender help you.

Helping the buyer make a better-informed decision.

Helping the seller substantiate the value of what they’ve built.

Helping the lender better understand the business supporting the loan.

And ultimately, helping give everyone involved greater confidence that the business has a strong future for years to come.

The goal isn’t to make the business look perfect.

The goal is to understand the business clearly.

And when you’re buying or selling a business, that’s incredibly valuable.