SBA Acquisitions After October 1, 2026: Four Deal Boxes, 1.25x Coverage, and the $3 Million Quality of Earnings Rule and the report has to be ordered by the lender

On August 14, 2026, SBA issued SOP 50 10 8.1, the successor to the June 2025 rulebook. Information Notice 5000-880695 is unambiguous about timing. The new SOP applies to applications issued an SBA loan number on or after October 1, 2026. Lenders must keep using SOP 50 10 8.0 for applications submitted through September 30. If you are mid-deal, that date is now one of the terms that matters.

Most of SOP 50 10 8 carries forward. Franchise Directory, 10% startup equity, 7(a) Small Loan ceiling at $350,000, and the 504 special-purpose structure are not the story. The story is buying a business. Appendix 15 of SOP 50 10 8.1 gives change-of-ownership lending its own rulebook, and it changes the coverage test, the required diligence, and who is allowed to order it.

Four Deal Boxes, Not One Category

The old SOP treated changes of ownership as one category with carve-outs. SOP 50 10 8.1 sorts every purchase into one of four transaction types. The lender has to enter the type into the SBA loan system, so it is visible to SBA oversight. If your lender wants you in a friendlier box, they have to document why you qualify.

Initial Acquisition is the default. Business Expansion is the opening for a proven operator. The match is now a 4-digit NAICS Industry Group, not the old 6-digit code, so an electrical contractor buying an HVAC contractor can plausibly qualify if both sit in 2382. The applicant must have operated under current ownership for two full fiscal years. Owner Buyouts cap outside investors: people not already employed by the business can acquire less than 50% and cannot become the largest shareholder, or the deal is pushed into Initial Acquisition rules.

1.25x Historical Coverage, and Projections Do Not Count

This is the number that will kill deals that penciled in September. For Initial Acquisitions, Owner Buyouts, and ESOP deals, SOP 50 10 8.1 requires a debt service coverage ratio of 1.25:1, using either the last fiscal year-end or an average of the last two, on a historical or adjusted basis. Coverage is EBITDA divided by combined post-transaction debt service. The SOP states that the lender may not rely on post-closing projections to meet the requirement. The lender must still look at the projections. They just cannot use them to clear the floor.

Moving the floor from 1.15x to 1.25x cuts the maximum debt a given cash flow can support by about 8%, before any Quality of Earnings adjustment. Add a QoE that trims 10% off adjusted EBITDA and the supportable debt falls roughly 17%. Interest-only seller notes no longer flatter year-one coverage: if any non-standby debt is interest-only, the lender must impute a 10-year amortization. Total transaction debt, including any seller note that is not on full standby, is capped at the business valuation. Pay more than the appraisal supports and the difference comes from equity, not the loan.

The $3 Million Quality of Earnings Rule

For Initial Acquisition and Business Expansion transactions where the business purchase price is $3 million or more, the lender must obtain a Quality of Earnings report in addition to the required business valuation. The threshold is measured on the business price before buyer equity, seller debt, or other financing, and it excludes owner-occupied real estate. You cannot structure under $3 million with a larger down payment. A $4 million closing built from a $2.7 million business and $1.3 million of owner-occupied property stays under the threshold.

The report has teeth because of what the lender must do with it. The SOP requires a Cash Proof: an independent reconstruction of cash receipts and disbursements that reconciles bank statement data to the income statement and tax return, on both a trailing-twelve-month basis and the last two fiscal years. Add-backs have to be documented. Customer concentration, contract continuity, and whether revenue and margins survive the sale have to be assessed. Then the lender must use the QoE earnings figure in the debt service coverage calculation. If that figure does not support the valuation and the proposed debt, the loan amount is reduced.

Owner Buyouts and ESOP transactions are exempt from the QoE requirement because existing owners retain operating knowledge. They are not exempt from the 1.25x historical coverage test. Small acquisitions lose a different shortcut: 7(a) Small underwriting is not permitted for any change of ownership, whatever the size. Every purchase, including deals under $350,000, goes through full Standard 7(a).

What This Means If You Are the Buyer

Underwrite the target at 1.25x historical coverage before you write the LOI. If the deal only works on a growth story, the price is wrong for an SBA structure after October 1. If the asking price sits just under $3 million, treat that the way you treat a car listed at $19,995: as information. And if you are raising investor capital for the injection, the SOP now splits equity sources into unlimited and limited. Standby debt, seller debt on full standby, and non-controlling minority equity may supply no more than half of the required injection. Distributions to those minority investors beyond tax obligations are prohibited until the 7(a) loan is paid off.

1. 01Ask your lender, in writing, which SOP governs your file. A loan number issued in September stays on 8.0. A loan number issued in October is 8.1.
2. 02Do not wait for the lender-ordered QoE to discover the earnings problem. Run a pre-flight Quality of Earnings now, knowing it will not satisfy the SOP, so you can reprice or walk before the lender's report does it for you.
3. 03If you are a lender, engage the QoE for your own file. The SOP is written that way on purpose. A report prepared for the borrower is not the report SBA will accept.

That last distinction is the whole product. OpsFi already does Quality of Earnings for the party deploying capital. From October 1 we do it two ways on SBA files: as the lender-ordered report that satisfies SOP 50 10 8.1, and as a buyer pre-flight so the 1.25x historical test is not a surprise in underwriting. We do not tell a buyer that commissioning us independently meets the SBA requirement. It does not.

What Did Not Change

SBA still does not require a feasibility study on every loan. The five 504 triggers, saturation, unique concept, specialized property, disproportionate project, rapid growth with unseasoned debt, are unchanged in SOP 50 10 8.1. Special-purpose 504 equity is still 15%, or 20% for a new business in a special-purpose property. Startup 7(a) equity is still 10%. The individual 7(a) maximum is still $5 million. Those rules, and the projection standards that still apply to startups and 504 projects, are in does an SBA loan require a feasibility study and SBA loan due diligence for 7(a) and 504.