For those following the new SBA QoE requirement on acquisitions above $3 million, I wrote a longer piece on how I’m thinking about it from the credit and lending side. My takeaway for buyers is simple. Ideally, by the time one of our clients gets to a QoE, we have already spent meaningful time diligencing the transaction and have good reason to believe the economics and financing make sense based on the information available. At that point, there is a hypothesis worth testing: that the reported financial performance is reasonably representative of the business being acquired. The QoE takes the financial diligence deeper. It independently tests the quality and sustainability of earnings and can identify issues that simply cannot be validated from the information available earlier in a transaction. A good lending and advisory team should help pressure-test the economics before significant third-party diligence dollars are at risk. That does not replace a QoE. It should make getting to one a more informed decision. I’ve seen buyers do it the other way around: get excited about a deal, move quickly into third-party diligence, and spend thousands only to uncover issues that could have been questioned much earlier. With QoE proposals ranging from roughly $7,500 to $30,000+, sequencing matters. After years on the credit side and close to half a billion dollars of transactions, you start recognizing patterns. You will not catch everything early, but the issues you do identify early are usually a lot cheaper. I went deeper on the requirement, lender sequencing, QoE economics, provider selection, and what buyers should be thinking about in the piece below. There will inevitably be some differences in how lenders implement the new SOP. Understanding those differences, and knowing how to structure around them, will matter for buyers. redacted