SBA SOPredactedtook effect October 1, 2026, and applies to applications SBA receives on or after that date. If you're buying a business with a 7(a) loan, it changes when you need a quality of earnings report (QoE) and how much that report matters. Below are the highlights of what's required on changes of ownership, followed by how I'd adjust before the LOI and during diligence. What Changed Under 8.1 When a QoE is required A QoE is required, on top of the business valuation, for Initial Acquisitions and Business Expansions with a Business Purchase Price of $3 million or more. That price is measured before buyer equity, seller debt or other financing. The appraised value of any real estate is subtracted. Who can prepare it The QoE must be performed by an independent, experienced financial professional and conducted for the benefit of the lender. It can't be prepared by or for the seller. The cash proof The QoE must include a cash proof. That means reconciling bank statements to the income statement and tax return for the trailing 12 months and the last two fiscal years. It must also reconcile to IRS transcript data. QoE earnings set the debt The lender must use QoE earnings for debt service coverage, with a 1.25x minimum on Initial Acquisitions. If coverage doesn't support the valuation and debt structure, the loan must be reduced. Added equity can fill the gap. No earnouts Seller earnouts are prohibited. Seller notes as equity Seller debt counts toward equity only if it's subordinated and on full standby. Full standby means no principal or interest payments for the term of the 7(a) loan. Seller notes and other limited sources, combined, can cover no more than half of the required injection. The seller's transition The seller can stay on only as a consultant, for up to 24 months total, including extensions. What I'd Do Before the LOI and in Diligence Check the threshold early Back out real estate and see where the business price lands. If it's $3 million or more, build QoE time and cost into your timeline from day one. Structure around the earnout ban Bridge valuation gaps with price, equity or a seller note on full standby instead. Be realistic about the seller note If the seller wants to be paid along the way, the note won't count as equity. It still counts toward total debt, and total debt can't exceed the business valuation. Get the records transaction-ready Request bank statements, tax returns and internal financials for the trailing 12 months plus the last two fiscal years. Get the seller's consent for IRS transcripts too. Ask before the LOI if you can. Document add-backs as you go Add-backs are the adjustments that bring reported earnings back to what the business really earns. Expect a hard look at owner pay, related-party items, one-time costs, deferred maintenance and customer concentration. Write the transition as consulting Put it in a consulting agreement capped at 24 months, not continued employment. Ask your lender before you order a QoE The SOP says a lender can't rely on another party's QoE without a review by one of its vendors. SBA's September 25 notice also mentions a reliance letter. Those two don't line up cleanly. Find out which path your lender will take before you pay for the work. The Takeaway On SBA deals at $3 million or more, the QoE is now required. It isn't a box to check. It sets how much debt you can carry. Collect the records early, structure around the earnout and standby rules, and agree on the QoE approach with your lender before the LOI. This is general information, not legal or lending advice. Confirm the details with your lender. If you want a second set of eyes on the numbers before an LOI, I'm happy to talk.