New SBA underwriting rules took effect on October 1, 2026, and they make acquisition financing harder to obtain. In this 37-second video, Moses Shmueli, Managing Partner of Northeastern Advisors, summarizes what changed for buyers and sellers of SBA-financed businesses.
What changed under SOP 50 10 8.1
- Higher coverage: initial acquisitions generally must show a debt service coverage ratio of at least 1.25 to 1.
- History, not projections: lenders must rely on historical or properly adjusted historical earnings, and they compare current interim results with the same period last year.
- Quality of Earnings for $3M+ deals: qualifying acquisitions with a business purchase price of $3 million or more require an independent, lender-ordered Quality of Earnings report.
- Valuation on every deal: every change of ownership transaction requires a business valuation.
- Firm equity: initial acquisitions require a 10% equity injection that cannot be reduced or eliminated.
What it means for buyers and sellers
For many transactions the combined effect is a smaller loan, more buyer equity and harder conversations about price and structure. Sellers with clean records and defensible earnings adjustments are better positioned, because their numbers hold up when the lender’s own review begins.
For the full analysis, including the citizenship rule and step-by-step checklists for buyers and sellers, read New SBA Acquisition Rules October 2026: What Buyers and Sellers Need to Know.
Video transcript
Buying a business with an SBA loan just got harder. Here’s what changed on October first. Acquisitions now need a debt service coverage ratio of at least one point two five. Lenders must use historical earnings, not projections, and they’ll compare this year’s results to last year’s. Deals of three million dollars or more need an independent quality of earnings report, and every change of ownership needs a business valuation. And buyers must put in at least ten percent equity. No exceptions. What it means: smaller loans, more equity, and tougher price talks. Sellers with clean books will close faster. Read the full breakdown at northeasternadvisors dot com.
Planning an SBA-financed acquisition or sale?
Contact Northeastern Advisors to discuss how the new rules affect your deal, or call us at (646) 461-6630.
This article is for informational purposes only and does not constitute legal, tax, accounting or lending advice.
