Quality of Earnings
Independent, CPA-led quality-of-earnings analysis for SBA acquisition loans — prepared in line with SBA SOP 50 10 8.1 and delivered in two weeks, for lenders and the borrowers they finance.
Overview
When a business acquisition is financed with an SBA 7(a) loan, the lender needs confidence that the target’s earnings are genuine and repeatable. A Pease Bell Quality of Earnings (Q of E) report delivers exactly that — an independent, CPA-led analysis prepared in line with SBA SOP 50 10 8.1 and delivered in two weeks. From our Cleveland, Ohio headquarters, we give lenders and the borrowers they finance a cleaner underwriting file, fewer eleventh-hour questions from credit, and a faster path to closing. Every engagement is performed in-house by our CPA-led, AI-enabled team, with every conclusion reviewed by a CPA.
SOP 50 10 8.1
SBA-aligned methodology
2 Weeks
Typical delivery
CPA-Led
AI-enabled team
What you receive
A branded Quality of Earnings report, built section by section so lenders and buyers can see exactly what the business earns — and why.
Report Letter
Scope, responsibilities, intended use, and limitations — so every reader knows what the report is and how to rely on it.
Deal Matters
The significant findings and matters most relevant to your transaction, surfaced up front rather than buried in the detail.
Quality of Earnings
Reported, seller-proposed, and diligence-adjusted EBITDA, with the key adjustments discussed and shown separately.
Income Statement Summary
Recast income statements across the analysis period, with the trends that drive the numbers explained in plain language.
Proof of Cash
The bank-to-book reconciliation of cash receipts and disbursements, so the earnings on paper are backed by cash that actually moved.
How we build your Quality of Earnings
A defined set of procedures, aligned to SBA SOP 50 10 8.1, covering the two most recently completed fiscal years plus the trailing twelve months (LTM) through the most recent practicable month-end.
Step 1
Obtain source documents
We gather trial balances, general ledgers, internal financials, tax returns, cash-activity detail, and any audited, reviewed, or compiled statements for the analysis period.
Step 2
Tax & financial reconciliation
We reconcile reported income statement activity to filed tax returns and any external financial statements, and investigate every material difference.
Step 3
Seller adjustments, vetted
We obtain the seller’s proposed EBITDA adjustments with support, test them for reasonableness, and present them separately so nothing is buried.
Step 4
Independent diligence adjustments
We identify, quantify, and document our own diligence adjustments to EBITDA — including revisions to the seller’s — and present the resulting diligence-adjusted EBITDA.
Step 5
Analytics & management inquiry
We run analytical procedures and direct inquiries to the seller on significant fluctuations, unusual transactions, and other items in the reported activity.
Step 6
Recast income statements
We prepare recast income statements for the analysis period reflecting all accepted adjustments, with narrative explaining the results.
Step 7
Proof of cash
We reconcile cash receipts and disbursements per the bank statements to reported income statement activity, accounting for related balance-sheet and other reconciling items.
Who we prepare Q of E reports for
SBA acquisition financing turns on whether the target’s earnings hold up. We work with everyone at the table who needs that answer independently.
- ✓SBA 7(a) lenders — a bank or non-bank lender needs independent, SOP 50 10 8.1-aligned analysis to support the credit file and move confidently to closing.
- ✓Buyers & borrowers — an acquirer financing a purchase wants to confirm what the business truly earns before committing to a price and a personal guaranty.
- ✓Sellers — an owner exiting through an SBA-financed sale wants the earnings story documented cleanly so diligence doesn’t slow or reprice the deal.
- ✓Searchers & independent sponsors — a first-time or repeat acquirer needs fast, credible diligence to keep an SBA-backed deal on schedule.
Why lenders & buyers choose Pease Bell
SBA-aligned and fast
Every report is prepared in line with SBA SOP 50 10 8.1 and delivered in two weeks, so your financing never waits on diligence and your credit file is ready when you need it.
CPA-led, AI-enabled
Our proprietary AI rapidly organizes and normalizes incomplete or disorganized records and flags gaps early — while a CPA reviews every conclusion. Even companies with messy books stay on schedule.
Diligence and tax under one roof
As a Top 200 U.S. CPA firm, our transaction team works alongside the firm’s tax and accounting advisors — so structuring and post-close questions are answered in-house, not handed off mid-deal.
How your engagement runs
A clear, two-week path from kickoff to final report. The engagement is a simple back-and-forth between our team and the seller — keeping documents and answers moving is what keeps the timeline on track.
- 1Kickoff & document request — the moment we’re engaged, the seller receives our full request list. Sending records early gives the process a head start.
- 2Records are assembled — the seller gathers the requested documents and sends them our way.
- 3First review & questions — we work through everything provided and come back with our initial round of questions.
- 4The seller responds — the seller answers our questions and fills in the context behind the numbers.
- 5Follow-up round — we review every answer and circle back with a tightened list of anything still open.
- 6The seller closes the loop — the remaining items are cleared and final answers come back to us.
- 7We finalize the report — we fold in the final answers and complete your Quality of Earnings report ahead of the walkthrough.
- 8Walkthrough & delivery — we walk the lender and buyer through the findings and hand over the final report.
Steps 5 and 6 may loop more than once if something material turns up — we keep going until the numbers are fully calibrated.
Quality of Earnings Team
Quality of Earnings FAQs
What is a Quality of Earnings (Q of E) report?
A Quality of Earnings report is an independent analysis of whether a company’s reported profits are genuine and repeatable. We rebuild the financials, reconcile them to tax returns, vet the seller’s proposed adjustments, develop our own diligence adjustments, and reconcile earnings to cash — then present reported, seller-proposed, and diligence-adjusted EBITDA. For an SBA acquisition, it gives the lender and the buyer an evidence-based view of what the business truly earns before the loan closes.
What is SBA SOP 50 10 8.1 and how does it affect the Q of E?
SOP 50 10 is the SBA’s standard operating procedure governing 7(a) and 504 lending, and version 8.1 sets the current expectations lenders follow. Our Quality of Earnings engagement is developed in line with the applicable provisions of SBA SOP 50 10 8.1, so the analysis and deliverable fit cleanly into the lender’s underwriting file and support the credit decision.
How long does a Q of E take?
We typically deliver in two weeks. The engagement is a back-and-forth between our team and the seller, so complete records sent up front and quick responses to our questions are what keep the timeline on track. Our proprietary AI speeds document collection and flags gaps early, which helps keep even companies with disorganized books inside the two-week window.
What period does the analysis cover?
The analysis period is the two most recently completed fiscal years plus the trailing twelve months (LTM), through the most recent practicable month-end. That window captures recent performance and current trends while remaining subject to the availability and completeness of the information the seller provides.
How is a Q of E different from an audit?
A Quality of Earnings report is not an audit and provides no opinion on the financial statements. An audit looks backward to confirm statements are fairly presented under GAAP. A Q of E is a deal-focused analysis: it normalizes earnings, tests trends, reconciles to cash, and highlights the adjustments and risks that affect the transaction. It is faster, tailored to the specific deal, and built to inform the lending and buying decision rather than satisfy a reporting requirement.
What is Proof of Cash and why is it included?
Proof of Cash reconciles the cash receipts and disbursements shown on the bank statements to the reported income statement activity, accounting for related balance-sheet and other reconciling items. It matters because it confirms the earnings on paper are backed by cash that actually moved — one of the most direct tests of whether reported results are real.
Do you work with the lender, the buyer, or both?
Both. Our Quality of Earnings report is an independent, CPA-led analysis built for lenders and the borrowers they finance. We adapt to each deal — working inside the seller’s data room or standing up our own — and finish with a walkthrough for the lender and buyer before handing over the final report.
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Contact Us
Tell us about your transaction and a member of our team will be in touch. Sample reports and the full engagement scope are available on request.