Key Takeaways:
- Beginning October 1, 2026, SBA SOP 50 10 8.1 requires an independent Quality of Earnings (QoE) analysis for certain Initial Acquisition and Business Expansion transactions of $3 million or more.
- A QoE looks deeper than a valuation — while a valuation determines what a business is worth, a QoE tests whether the earnings behind that value are sustainable and reliable.
- Key areas of review include revenue and profitability trends, customer concentration, nonrecurring items, owner-related adjustments, working capital, and sustainable cash flow.
- Lenders, buyers, and sellers can all use a QoE to identify risk and validate earnings before it affects deal terms or financing.
- BRC’s Transaction Advisory Services team performs QoE analyses and financial due diligence to help clients navigate transactions with confidence.
What the New SBA Requirement Means for Your Next Transaction
New SBA requirements are making Quality of Earnings analyses an increasingly important part of business acquisitions.
Beginning October 1, 2026, SBA SOP 50 10 8.1 will require an independent Quality of Earnings (QoE) analysis for certain Initial Acquisition and Business Expansion transactions with purchase prices of $3 million or more. For lenders, buyers and sellers, a QoE provides a deeper look at the financial performance behind a transaction—helping identify risks, validate sustainable earnings and support informed decisions.
How BRC Can Help
BRC’s Transaction Advisory Services team provides Quality of Earnings analyses and financial due diligence to help clients navigate transactions with confidence. Our team evaluates key areas including:
- Revenue and profitability trends
- Customer concentration
- Nonrecurring and unusual items
- Owner-related adjustments
- Working capital requirements
- Sustainable cash flow and debt service capacity
Unlike a valuation, which focuses on what a business is worth, a QoE focuses on whether the earnings supporting that value are sustainable and reliable.
Whether you are a lender evaluating financing, a buyer assessing an acquisition or a seller preparing for a transaction, BRC can provide the financial insights needed to better understand the business and identify potential issues before they impact the deal. As SBA requirements evolve, BRC’s Transaction Advisory Services team is ready to help you navigate the numbers and move your transaction forward with confidence.