Guidance Needed: Has Anyone Closed an SBA Deal With Only Bank Statements and Cash Accounting?

December 04, 2025

by a searcher in Miami, FL, USA

I am evaluating a small recruiting firm with just over $700k in SDE, the seller wants $2.6M (which seems steep, but I think they’re operationally strong with good offshore staff and automations. The business has been managed entirely on cash accounting in Google Sheets by the wife of the main operator, there’s no formal accounting system or practice in place. There is no balance sheet. There are uncollected funds, but they’ve never been posted as revenue, it’s truly cash. I plan to have the asset operated by an experienced recruiting operator who would step in full time post close. I am trying to understand two points. First, how to properly diligence financial performance when the only source data is the bank transaction history and the owner’s spreadsheets. Second, whether any QoE providers will take on work like this and what scope is realistic. I am also trying to determine if SBA lenders will underwrite a transaction that lacks formal accounting records. If anyone has direct experience executing or diligencing a deal under similar conditions, I would appreciate guidance on best practices and any structural considerations I should anticipate.

Reply by a professional
from Liberty University in Fort Myers, Florida, United States

Hello, I run into this scenario somewhat often (maybe 1 or 2 engagements a month) in the QoE work my firm does. I have outlined the main points in your post with my commentary below: SBA Lenders: They typically will use tax returns, which I assume the business has, but you did not mention in your post. They will very rarely ever ask to see a bank statement, but will ask for interim financials. Typically, if the bank receive tax returns that check the DSCR box, you are normally in a good spot (for this specific item, but there are many other things the SBA underwriters will look at). If there are no tax returns, you have a much most select set of banks that would underwrite the deal. Some banks will be able to use the QoE report instead of the tax returns (assuming it is done well). I have banks or loan brokers I can introduce you to if you are interested. Quality of Earnings: The approach my firm takes to close this gap is to effectively redo their bookkeeping for the amount of years our client would like us to go back. We do not recommend anything less than 2 full years and the current year to date, and typically people will do 3 full years and current year to date. We go line by line through bank and credit card statements, assign vendors to transactions, ask the seller to provide context on the vendors, and then will be able to present back the business P&L and balance sheet activity. This has worked for us in the past for deals with the bank underwriting, and gives a great picture of the company with a lot of detail for you to analyze. It sounds like the seller already has the transaction detail, and hopefully they already have the work done that will classify them into a P&L/BS. The main thing you will want to check is that they do not have any transactions missing. We will make sure the starting and ending balance difference from the actual statements tie back to the activity on the report. Then you should be able to put together a cash basis balance sheet somewhat easily. If you need an accrual balance sheet, you'll have to look through each item you want to accrue for and see what data the seller has available (AR, AP, etc). With recruiting, I assume there may be some AR/AP for commissions or something, but likely immaterial on a full year basis (obviously I do not know since I do not have any data). Our QoE reports are typically $6,000 for SBA sized deals, but redoing the bookkeeping is one of our two potential upcharges (the other is if you are buying multiple businesses). We price out the upcharge depending on the level of effort once we see the data we need to build for the bookkeeping on our end. I am happy to connect and talk in more detail if you would like. Below is my Calendly link where you can schedule time with me that works around your schedule: https://calendly.com/josh-tonnesenaccountingservices/30min

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

Great question. Generally most lenders are going to want to see the last three years tax returns. You did not mention if the tax returns were filed or not. Assuming they were, it is not usually hard to create a balance sheet and use interim financials from their accounting to get the deal qualified. Technically speaking the SBA still wants to see tax returns. In certain circumstances you can get away without tax returns like if you are buying a division of a company and not the full company. But if someone just is not filing their tax returns, that is usually a red flag for lenders and typically not something we have found lenders willing to finance. They need to be able to justify why there are not tax returns available. I have had sellers go and file the past three years tax returns to get it fixed with the IRS to sell, but you would have to get the seller comfortable with that. One other thing to keep in mind if they did not file their tax returns is what else are they doing with the business that they should not be doing? Are they paying proper payroll taxes? Do they have the licensing or registrations they need? Are there other expenses that are off book. You always want to consider other things that could impact the business. I would be happy to have a discussion from a lending perspective and see if we can provide any assistance. You can reach me here or directly at redacted Good luck with this opportunity.

Join the discussion