Should I give escrow or earnest money when submitting an LOI?

To echo others, it is not common in lower middle-market deals, but likely to be requested in Main Street deals particularly when the broker for those deals is a licensed real estate agent, which is very common. Some states allow those with a real estate license to broker businesses, too, so the practice spills over from real estate transactions.

It's very common to state an specific amoount of escrow money or earnest money in an LOI, but it's not common to give escrow money when submitting LOI. A typical deal would have a commitment of let's say $250K in earnest money within X days of signing an LOI at relatively broad terms. Usually the money goes hard if the deal does not happen for a reason related to the buyer or after due diligence period expires.