November 2026: SBA’s New Quality of Earnings Requirements: What Are They and Why You Should Care

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Includes a Live Web Event on 11/19/2026 at 1:00 PM (EST)

November 19, 2026 | 1 PM EDT

Under SBA SOP 50 10 8.1 (effective October 1, 2026), an independent Quality of Earnings (QoE) report is mandatory for SBA 7(a) acquisitions and expansions priced at $3 million or more. 

This requirement is important because it establishes strict due diligence. By mandating cash proofs, tax return reconciliations, and rigorous validation of seller add-backs, the SBA ensures loan underwriting relies on true, sustainable cash flow rather than aggressive seller projections. 

Business appraisers must pay attention because the QoE directly impacts the baseline normalized earnings used in valuation models. Unsupported adjustments discredited by a lender's QoE will alter cash flow assumptions, impacting value conclusions and debt service feasibility. Appraisers who align their normalization methodologies with these QoE standards will deliver far more defensible, deal-ready reports.

John W. Zoellner

John W. Zoellner

Owner

Zoellner Garten & Company

John founded Zoellner, Garten & Company in 1988.  He is a Master Business Certified Appraiser (MBCA) and Master Certified Machinery & Equipment Appraiser (MCMEA).  Early in his career he spent nearly two decades as a Commercial Lender in the Banking industry – very helpful when dealing with the sale and purchase of businesses. He currently serves as an Advisor and/or Member of the Board of Directors for several area businesses.

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Live Webinar: Nov 2026 - SBA’s New Quality of Earnings Requirements: What Are They and Why You Should Care
11/19/2026 at 1:00 PM (EST)  |  60 minutes
11/19/2026 at 1:00 PM (EST)  |  60 minutes Under SBA SOP 50 10 8.1 (effective October 1, 2026), an independent Quality of Earnings (QoE) report is mandatory for SBA 7(a) acquisitions and expansions priced at $3 million or more. This requirement is important because it establishes strict due diligence. By mandating cash proofs, tax return reconciliations, and rigorous validation of seller add-backs, the SBA ensures loan underwriting relies on true, sustainable cash flow rather than aggressive seller projections. Business appraisers must pay attention because the QoE directly impacts the baseline normalized earnings used in valuation models. Unsupported adjustments discredited by a lender's QoE will alter cash flow assumptions, impacting value conclusions and debt service feasibility. Appraisers who align their normalization methodologies with these QoE standards will deliver far more defensible, deal-ready reports.
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