SOP 50 10 8.1's $3M QoE rule: which SBA buyouts cross the line
Since Oct 1, an SBA-financed purchase at $3M or more needs a QoE. Priced against last year's 7(a) buyout loans, 13.3% to 19.9% cross that line.
Contents 6 sections
Since Oct 1, SOP 50 10 8.1, the SBA's rulebook for its lenders, has required a quality of earnings report when an SBA-financed business purchase is $3M or more. When we priced last year's SBA 7(a) buyouts against that line, between 13.3% and 19.9% landed above it. For hotels and motels, more than half did. Both figures read the whole loan as the price, before exempt deals and real estate come out.
The rulebook covers lenders in the 7(a) and 504 programs. The SBA's issuance notice (opens in a new tab) gives its full title, "Lender and Development Company Loan Programs," and this version took effect October 1, 2026 (opens in a new tab). Among other changes, it adds a lender-side QoE to initial acquisitions and business expansions with a Business Purchase Price of $3 million or more (opens in a new tab).
The line is the purchase price
The test is the price of the business. The loan doesn't decide it. BGH Valuation puts it plainly: the $3 million threshold is determined before the application of buyer equity, seller debt, or other financing sources (opens in a new tab). So a buyer who brings a big check or a seller note doesn't get under the line that way. Two carve-outs work in the buyer's favor. Owner-occupied real estate is excluded from the purchase price (opens in a new tab), and owner buyouts and ESOP and cooperative deals don't need the report at all.
KSM (opens in a new tab), BGH, PilieroMazza (opens in a new tab) and Capital Source have all written up the rule. None of them says how many real deals sit above it.
Last year's 7(a) buyouts against $3M
The SBA publishes its 7(a) and 504 loans in the 7(a) and 504 FOIA files (opens in a new tab), updated quarterly. We took the 7(a) loans recorded as change-of-ownership financings, dated July 2025 through June 2026: a full year of buyouts closed under the old rules. The median loan was $0.81M.
A loan isn't a price, so we read each loan at a few loan-to-price ratios. If the loan covers 90% of the price, 13.3% of those buyout loans imply a price of $3M or more. If it covers 70%, the share is 19.9%. At 80% it's 16.6%. Each figure treats the whole loan as purchase price. Exempt owner buyouts are still counted, and so are real estate, working capital and closing costs.
That band is the overall answer. The spread across industries is much wider.
By industry
Here is the same test, split by the borrower's industry. Each share is the share of that industry's 7(a) buyout loans implying a $3M+ price, with the loan read at 90% or 70% of the price.
| Industry | Above $3M at 90% | Above $3M at 70% | Median loan |
|---|---|---|---|
| Hotels and motels | 57.1% | 71.3% | $3.24M |
| Gas stations and convenience stores | 19.0% | 28.3% | $1.28M |
| Child care, home health and senior care | 15.3% | 25.5% | $0.97M |
| HVAC, plumbing, electrical, roofing, landscaping, pest, machine shops, dental, vet | 9.7% | 18.4% | $0.89M |
| Auto repair | 8.7% | 15.2% | $0.72M |
| Restaurants and bars | 5.4% | 8.2% | $0.48M |
| Liquor stores | 5.4% | 8.5% | $0.87M |
| Everything else | 12.6% | 18.9% | $0.77M |
The hotel and gas station rows count the whole implied price, real estate included. Those are the rows the real estate carve-out shrinks most.
Hotels are the outlier. They were 4.1% of all 7(a) buyout loans but 17.7% of the ones implying $3M or more, about 4.3 times their weight. Even the median hotel loan is above $3M before you gross it up to a price.
Restaurants sit at the other end. They were 12.4% of buyout loans, more than any other named group in the table, and only 5.4% to 8.2% of them clear $3M. A restaurant buyer can mostly ignore the new report. A hotel or gas station buyer should check the price net of real estate early.
The trades a PE add-on team would look at (HVAC, plumbing, electrical and the rest of that row) sit near the middle. Their median loan of $0.89M is a little above the overall median, and 9.7% to 18.4% of them cross.
Which lenders close the $3M-plus buyouts
Three lenders show how differently the large deals are spread. For each bank below, the first share is its slice of all 7(a) buyout loans. The second is its slice of the buyout loans implying $3M or more at 90% loan-to-price.
| Lender | Share of all buyout loans | Share of $3M+ loans | Own loans above $3M | Median loan |
|---|---|---|---|---|
| Live Oak Banking Company | 8.8% | 10.7% | 16.1% | $0.91M |
| GBank | 1.6% | 6.1% | 50.5% | $2.92M |
| The Huntington National Bank | 8.2% | 5.0% | 8.2% | $0.36M |
Live Oak carries a bit more than its weight in the large deals. GBank is a specialist. It made 1.6% of buyout loans and 6.1% of the large ones, so about half its buyout book implies $3M or more. And 97.9% of those large GBank loans went to hotels and motels. GBank alone financed about a third (33.6%) of the hotel buyout loans implying $3M+.
Two of GBank's hotel loans show the size: $5.00M each, for a Quality Inn in Danville, Virginia dated August 2025 and a hotel in Waycross, Georgia dated July 2025.
Huntington runs the other way. It made 8.2% of buyout loans but 5.0% of the large ones, with a median loan of $0.36M. Only 8.2% of its own buyout loans imply $3M or more.
If you're a broker or a buyer on a hotel deal, ask early whether your lender already writes loans at this size, and who it uses for the report. On a deal near Huntington's $0.36M median loan, like its $0.36M loan for a fitness center in Cincinnati in December 2025, the implied price is nowhere near $3M and the new report doesn't come up.
Why the result is a range
The FOIA file gives the loan amount, not the price. Dividing by 0.9 assumes a thin buyer check and no seller note. Dividing by 0.7 leaves room for a seller note and more cash from the buyer. Real deals sit on both sides of that band.
Two things push the real figure down. The rule takes owner-occupied real estate out of the price, and many hotel and gas station loans pay for the land and the building too. And a 7(a) acquisition loan often carries working capital and closing costs on top of the price. So treat the hotel and gas station rows as the top of their range. One thing pushes it up: we count loans, so a purchase split across two 7(a) loans shows up as two smaller ones.
Checking your own deal
The file can't tell an owner buyout or an ESOP from a first-time acquisition. You can, and those two are exempt. For everything else, the check takes three steps. Start from the full purchase price before any seller note or equity. Take out owner-occupied real estate. Then compare what's left with $3M. If it's close, ask the lender early whether they read the price the same way.
To see what SBA buyouts in your industry looked like last year, with lender, place and loan size, filter the deal finder to SBA change-of-ownership loans and your sector.