SBA Acquisition Underwriting: How to Review the Quality of Earnings Report — Online Training
SOP 50 10 8.1 requires a Quality of Earnings report for Initial Acquisition and Business Expansion transactions with a business purchase price of $3 million or more. The lender must use the report’s earnings in its debt service coverage determination. The findings can affect the loan amount and how the acquisition is financed.
This training focuses on the lender’s work after the report arrives. Thirty-year SBA Veteran and Chief Credit Officer Michael Bland will show how to review the Cash Proof, evaluate the support for earnings adjustments and write the credit memo discussion connecting the QoE findings to the proposed loan amount. The session addresses how to use the report in acquisition underwriting, rather than how to prepare it.
The discussion will address decisions that arise when the report differs from the seller’s financial statements or the original underwriting. That includes identifying questions for the preparer, obtaining support for unresolved adjustments and explaining a revised financing structure to the buyer and approving credit officer before closing.
What the Session Will Cover
- When SBA requires a QoE report, how to determine the business purchase price and which transactions are exempt.
- Reviewing the preparer’s independence and experience, engagement terms and whether the report was prepared for the lender’s benefit.
- Evaluating the Cash Proof and following up on discrepancies among bank statements, financial statements, tax returns and IRS transcripts.
- Assessing the documentation supporting owner compensation adjustments, nonrecurring income and expenses, and related-party transactions.
- Reviewing how deferred maintenance and differences between cash-basis and accrual-basis reporting affect the earnings analysis.
- Evaluating customer concentration, contract continuity and the support for maintaining revenue and margins after the sale.
- Using QoE earnings in the debt service coverage calculation and addressing differences from the financial assumptions supporting the business valuation.
- Revisiting the loan amount, equity contribution and seller financing when the findings do not support the proposed debt structure.
- Writing the credit memo discussion so a reviewer can follow the earnings adjustments, questions resolved and basis for the final repayment analysis.
How the Training Works
Course Access
All Coleman professional training courses are hosted on Litmos, our online learning platform. Upon payment, you will receive a link to access your course. Access remains available for one year from the date of purchase, allowing you to complete the training at your own pace.
For questions or assistance, please contact anna@colemanreport.com.
Training Materials
Course presentations and supplemental handouts are available directly in Litmos under the “Additional References” section.
Certificate of Participation
Upon completion of the training, participants will receive a Coleman Certificate of Participation to document their continuing education and professional development for SBA and regulatory purposes.
100% Satisfaction Guarantee
We stand behind our training with a 100% money-back satisfaction guarantee. If you are not completely satisfied with your purchase, we will provide a full refund — no questions asked.
Bob Coleman
Publisher, Coleman Report
bob@colemanreport.com