Due Diligence & Quality Of Earnings Guide for SBA Financing

April 08, 2022

by a searcher in Houston, TX, USA

SBA lenders,

What type of quality of earnings reporting do you require for a deal with revenue size of $1M.

Listing the items out will be helpful.

Thank you!

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

We are a commercial loan brokerage shop that works with over 50 SBA 7A lenders and we do quite a bit of business acquisition financing. For an acquisition of $1 million, lenders typically do not require a Quality of Earnings report. They rely on the tax returns and business valuation. I have even seen substantially larger deals where the lenders typically do not require Quality of Earnings reports if the deals are not that complicated and the existing financial reporting is strong (like reviewed or audited financial statements). Usually it is the more complex or very large transactions where you will see a Quality of Earnings be a requirement or condition. Please let me know if you would like to discuss further at redacted

Reply by an intermediary
from Creighton University in Los Angeles, CA, USA

I co-founded a YC-backed startup that automates parts of the QoE/DD processes so you don't make any mistakes during the most important part of the acquisition process. It prevents you from looking back and wishing you had asked a certain question during this stage. Our AI product saves you weeks of time and thousands of dollars. I think it would make sense for us to chat. You can schedule a time on my calendar here: https://calendly.com/dealwise/dealwise-30-minute-call

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