Independent Quality of Earnings Reports Built for SBA 7(a) Lenders
As of October 1, 2026, the SBA requires independent Quality of Earnings reports on change-of-ownership transactions of $3M or more. Alpine Mar delivers SOP 50 10 8.1-compliant QoE analysis commissioned directly by you, for you.
What every report delivers.
When you commission Alpine Mar for a lender-required QoE, every engagement is built on the same five components.
- 01
Cash Proof Analysis
We independently reconstruct cash inflows and disbursements, reconciling bank-statement data to the income statement and tax returns — on a trailing-12-month basis and for the last two fiscal years — to catch discrepancies between reported earnings and actual bank activity.
- 02
Earnings Reconciliation
We reconcile unadjusted net income across accountant-prepared financials, tax returns, internal statements, and IRS transcript data into a normalized, adjusted earnings figure — the number you'll use for DSC, and every number is supported.
- 03
Documented Add-Backs & Adjustments
Non-recurring items, above- or below-market owner compensation, related-party transactions, deferred maintenance, and cash- vs. accrual-basis differences — every adjustment identified, documented, and quantified so nothing surprises you in the credit file.
- 04
Revenue Quality Assessment
We assess the sustainability of the revenue base — customer concentration, contract continuity, and the likelihood margins hold after the sale — feeding directly into the borrower's ability to service debt post-acquisition.
- 05
DSC-Ready Delivery
Normalized earnings formatted for immediate application to your Debt Service Coverage calculation. If DSC doesn't support the valuation and proposed debt structure, we flag it clearly so you can adjust the loan amount or require additional equity.
From engagement letter to credit file.
A clear, milestone-driven process tied to your PLP loan-number timing and your underwriting schedule.
- Step 01
Engagement & Scoping
Lender-commissioned engagement letter executed. Scope is tied to the Letter of Intent and purchase price, with timing coordinated to support PLP loan-number issuance and your underwriting schedule.
- Step 02
Data Reconciliation
We gather and reconcile the financial package: accountant-prepared financials, corporate tax returns, IRS transcripts, and the company's financial statements — the foundation for everything that follows.
- Step 03
Cash Proof
Bank-statement data is reconciled to the income statement and tax return for both the trailing 12 months and the last two fiscal years. Discrepancies are identified and investigated.
- Step 04
Earnings Normalization
We walk through add-backs and adjustments line by line — owner compensation, related-party transactions, one-time expenses, accounting-method differences — all documented and supported.
- Step 05
Revenue Quality Review
We assess customer concentration, contract continuity, and the likelihood margins hold post-sale, framing the earnings-sustainability analysis.
- Step 06
DSC-Ready Delivery
Final report delivered with normalized earnings formatted for direct application to your Debt Service Coverage calculation. Clear findings, clear recommendations, ready for your credit file.
The new SBA requirement, handled.
Why SOP 50 10 8.1 changes change-of-ownership diligence, who this report is for, and the standards we hold every engagement to.
Starting October 1, 2026, SBA SOP 50 10 8.1 introduces a new requirement: business valuations are no longer sufficient on their own. For change-of-ownership transactions with a purchase price of $3 million or more, you now need an independent Quality of Earnings report prepared for the benefit of the lender.
This is different from the QoE analysis performed on the buy-side or sell-side. This report is commissioned by and for you, the lender — not prepared for the borrower or seller. The goal is straightforward: give you normalized, defensible cash flow you can tie directly to your Debt Service Coverage calculations.
Alpine Mar's Transaction Advisory Group brings investment banking and private equity backgrounds to SBA lending. We've built our QoE methodology around an unbiased assessment of the company's financial health through three core requirements: Cash Proof validation, DSC-ready earnings normalization, and strict independence protocols that align with SBA guidance and your PLP underwriting timelines.
Who this service is built for
Alpine Mar's SBA Quality of Earnings service is built for SBA lenders navigating the new October 1, 2026 requirement. That typically means:
- Regional and community banks originating SBA 7(a) loans
- Credit teams evaluating change-of-ownership deals in the $3M+ range
- Loan officers and commercial lenders who need credible, defensible earnings analysis for DSC underwriting
- Institutions already managing buy-side or sell-side QoE work and looking for an independent, lender-focused provider
If you're handling SBA 7(a) transactions and the new SOP 50 10 8.1 requirement just landed on your desk, this is what you need.
Compliance standards we follow
Every Alpine Mar SBA Quality of Earnings report adheres to SOP 50 10 8.1 Section A, Chapter 5, and the specific guidance on Quality of Earnings reports. That means:
- Independent analysis commissioned by and for the lender
- Cash Proof validation on a trailing-12-month and last-two-fiscal-year basis
- Earnings reconciliation to accountant-prepared financials, tax returns, internal statements, and IRS data
- Documented add-backs and adjustments for all non-recurring items, owner-compensation variations, related-party transactions, deferred maintenance, and accounting-method differences
- Revenue quality assessment addressing customer concentration, contract continuity, and margin sustainability
- DSC-ready normalized earnings the lender can apply directly to Debt Service Coverage calculations
- Retention of the report in your credit file with credit-memorandum documentation
Why lenders choose Alpine Mar for QoE.
Investment banking and private equity backgrounds, attestation-grade independence, and a methodology built around SBA guidance.
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True Independence
Engaged directly by and for you, the lender. We never prepare QoE for the borrower or seller in the same transaction, and every engagement clears the same independence protocols used in our attestation practice.
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SBA-Specific Fluency
Every report is built around the Cash Proof methodology, DSC-ready normalization, and PLP timing in SOP 50 10 8.1. We track SBA policy notices and SOP releases so our approach stays aligned with current standards.
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Investment Banking Pedigree
Our team brings real M&A experience from investment banking and private equity. We understand how deals work, what earnings quality means, and where the hidden risks live.
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Technology-Forward Delivery
A digital-first firm built for speed and transparency. Our process moves at the pace of your deal, with clear milestones tied to PLP loan-number timing and no workflow friction.
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AICPA & FICPA Members
Certified Public Accountants with credentials that matter. Your credit file gets a report backed by professional standards and professional liability.
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Key details, answered.
The thresholds, transaction types, and timing that determine when a lender-commissioned QoE is required.
How is this different from buy-side or sell-side QoE?
This QoE is commissioned by and for you, the lender — not prepared for the borrower or seller. The goal is normalized, defensible cash flow you can tie directly to Debt Service Coverage.
What purchase price triggers the QoE requirement?
A purchase price of $3 million or more. The threshold is measured before the application of buyer equity, seller debt, or other financing sources.
Which transaction types are subject to the QoE requirement?
Business Expansion and Initial Acquisition change-of-ownership transactions at $3M+. Owner Buyout and ESOP & Cooperative transactions are exempt, because the existing owner retains operational knowledge and the deal doesn't change management or operating structure.
How does the QoE affect Debt Service Coverage?
The lender must use the company's earnings from the QoE in the DSC determination. If DSC doesn't support the valuation and proposed debt structure, the loan amount must be reduced accordingly, and additional equity may be required to close the gap.
What are the credit-file requirements?
The QoE report must be retained in the credit file, and the credit memorandum must be updated with the QoE's findings and any DSC impact once the diligence process is complete.
When must the QoE be engaged for PLP authority?
For PLP-authority applications, the business valuation and applicable QoE must be formally engaged — vendor retained and engagement letter in place — by the time the SBA Loan Number is issued.