SBA Advisory
Advisory for SBA 7(a) and 504 borrowers and lenders, from getting a deal ready for underwriting to the financial work current SBA rules may require.
Overview
SBA financing makes many acquisitions and expansions possible, but the program comes with detailed eligibility, documentation, and underwriting rules that change as SBA updates its Standard Operating Procedures. Pease Bell helps borrowers prepare for that process and helps lenders get the independent financial work they need. We organize historical financials, identify issues that could slow approval, and provide quality of earnings and valuation support for SBA 7(a) and 504 transactions.
Current SBA SOP guidance can require a quality of earnings report, an independent business valuation, or both on certain 7(a) change-of-ownership loans, and it sets expectations for the independence of the parties preparing that work. We help borrowers and lenders understand at the outset what a specific deal is likely to need, so the work is scoped correctly and the loan file is complete when it reaches credit review.
How We Support SBA Transactions
Transaction Readiness
We help borrowers organize tax returns, interim financials, and supporting schedules, reconcile differences between them, and flag issues a lender is likely to raise before the application is submitted.
Quality of Earnings
We prepare quality of earnings analyses for SBA acquisition loans, testing reported earnings, normalizing adjustments, and working capital so lenders can underwrite cash flow with confidence in the numbers.
Business Valuation
We coordinate business valuation support for SBA change-of-ownership transactions, scoped to the lender’s requirements, the transaction structure, and current SBA guidance for the loan type.
Eligibility and Documentation
We help borrowers and lenders work through financial documentation tied to SBA eligibility, such as size standards, use of proceeds, equity injection sources, and affiliation questions.
Lender Support
We work with SBA lenders as an independent provider of financial due diligence, helping credit teams fill gaps in borrower information and document their analysis.
Post-Closing Accounting
After closing, we help new owners set up accounting, tax, and reporting processes so they can meet lender reporting covenants and manage the business from reliable numbers.
SBA Deal Issues We Help Address
- ✓Tax returns and internal financials that tell different stories about earnings
- ✓Seller add-backs that are difficult to support in underwriting
- ✓Uncertainty about whether a deal requires a quality of earnings or valuation
- ✓Incomplete documentation that delays credit approval or closing
- ✓New owners without accounting processes to meet post-closing reporting requirements
Frequently Asked Questions
Does an SBA loan require a quality of earnings report?
Some do. Current SBA SOP guidance can require a quality of earnings report on certain 7(a) change-of-ownership loans, generally depending on the transaction type and size, and it addresses who may prepare the report. Because SBA updates these rules periodically, borrowers and lenders should confirm what applies to a specific loan when the deal is being structured.
What is the difference between SBA 7(a) and 504 loans?
The 7(a) program is SBA’s general business loan program and is commonly used for business acquisitions, working capital, and equipment. The 504 program is designed mainly for long-term financing of major fixed assets such as real estate and heavy equipment, and typically involves a bank lender and a Certified Development Company working together on the financing structure.
How can a borrower prepare for SBA underwriting?
Borrowers can help underwriting move faster by having several years of tax returns and financial statements ready, reconciling any differences between them, documenting the source of their equity injection, and supporting any add-backs to earnings. For acquisitions, organizing the seller’s financial records early is just as important, since the lender will underwrite the target business’s cash flow.
Can Pease Bell work for the lender instead of the borrower?
Yes. We work with both SBA borrowers and SBA lenders. When a lender engages us for quality of earnings or other diligence, our work is performed for the lender, and we review independence considerations for each engagement so the scope and the intended users of the report are clear to all parties.
Related services & industries
Contact Us
Tell us about your organization and a member of our team will be in touch.