Pre-LOI screening
How to Screen an SBA Buyer and Business Before the LOI
Policy update: SBA SOP 50 10 8.1 took effect October 1, 2026. This guidance was reviewed before that change and is due for review. Confirm current transaction requirements with your lender and the official SBA SOP.
Before an LOI, screen two separate questions: whether the buyer can support the acquisition and whether the target business can support the proposed debt. Then test the combined structure, documentation, eligibility, and lender fit. Advancing on proof of funds alone leaves the largest underwriting risks unresolved.
Transparent methodologyPolicy as of 2026-08-15Preliminary, not a loan approval
Buyer screen
Buyer screen
- Verified liquidity and total cash-to-close capacity.
- Post-close reserves and outside obligations.
- Credit context and material adverse events.
- Relevant management and operating experience.
- Ownership, guarantor, citizenship, and residency facts.
Business and structure screen
Business and structure screen
- Tax-return and financial-statement reconciliation.
- Defensible cash flow and add-backs.
- Purchase price, total project cost, and valuation risk.
- Modeled senior and seller debt service.
- Working capital, leases, capital expenditure, and concentration.
- Seller transition, seller-note treatment, and lender-fit considerations.
Advance, restructure, or pause
Advance, restructure, or pause
Advance when buyer capacity, target cash flow, ownership eligibility, documentation, and structure all have a credible path. Restructure when price, equity, seller debt, working capital, or transition can cure the gap. Pause when the conclusion depends on unsupported earnings, unverifiable funds, prohibited ownership, or future performance rather than documented history.
Authored and reviewed by Emporio Partners
Historical policy basis: SBA SOP 50 10 version 8, effective 2025-06-01. Version 8.1 took effect 2026-10-01; this guidance has not yet been substantively reviewed against that update.
Primary policy source
Educational planning guidance only. Emporio Partners is not a lender and does not issue approvals, pre-approvals, commitments, or guarantees. Lenders determine eligibility, eligible cash flow, structure, terms, and approval.
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