Short answer: the SBA itself does not require a quality of earnings report. But the bank writing your 7(a) loan sets its own credit standards on top of SBA rules, and more and more lenders want independent diligence work product in the file, especially as deal sizes climb toward the $5 million program cap.
What the lender is actually worried about
An SBA acquisition loan is underwritten against the cash flow of the business you are buying. The underwriter's whole question is whether historical earnings are real and likely to continue under your ownership. Specifically they look at:
- Debt service coverage. Does normalized cash flow cover the loan payment with room to spare, typically 1.25x or better?
- The add-back schedule. Seller discretionary expenses and EBITDA add-backs are where deals get stretched. Underwriters discount add-backs they cannot verify.
- Revenue durability. Customer concentration, contract terms, and whether earnings depend on the departing owner personally.
- Books that tie out. Tax returns, financial statements, and bank activity that tell the same story. A proof of cash settles this definitively.
When lenders ask for a QoE by name
Patterns we see across SBA deals: loans above roughly $1.5 to $2 million, deals where add-backs are a large share of claimed earnings, cash-heavy industries, and any file where the financials and tax returns diverge. In those cases many lenders now request independent diligence work product before credit approval, and some require it outright.
The timing trap
The painful version of this story: you sign the letter of intent, apply for the loan, and three weeks into underwriting the bank asks for a QoE. Traditional firms quote you four to six weeks and $20,000. Your exclusivity window and your rate lock are both burning while you wait. Ordering diligence early, before the lender asks, removes the single most common bottleneck in SBA acquisition timelines.
What a lender-ready package looks like
Underwriters do not need a 200-page report. They need normalized financials, a defensible EBITDA bridge with every add-back traced to source entries, working capital analysis, and a summary letter from an independent party they can put in the credit file.
That is exactly what Zenith's reviewed tier produces: the full diligence workbook generated straight from the target's accounting system, a line-by-line analyst review, a findings call with your deal team, and a lender-ready summary letter. The self-serve workbook alone is often enough at the screening stage, before you are under LOI; both are priced per report on the pricing page.
