Ikigai QoE Lender · engaged by the lender, for the lender
The Appendix 15 report, in Appendix 15's order.
You commission it, you are its only addressee, and every requirement maps to a numbered section. Adjusted earnings carry through to coverage, the binding loan constraint and the maximum supportable loan — the part your analyst would otherwise rebuild by hand.
The DSC Bridge, live on the sample file
Fictional company — illustrative figuresWhat Appendix 15 requires
A summary. The full explainer covers each requirement and its sources.
| Trigger | A lender-commissioned Quality of Earnings report is required on 7(a) Initial Acquisitions and Business Expansions where the business purchase price is $3,000,000 or more, net of owner-occupied real estate at appraised value.(source: SBA SOP 50 10 8.1, Appendix 15)src |
| Exempt | Owner Buyouts and ESOP or cooperative transactions are exempt.(source: SBA SOP 50 10 8.1, Appendix 15)src |
| Who commissions it | The report must be commissioned by the lender and may not be prepared by or for the borrower or the seller.(source: SBA SOP 50 10 8.1, Appendix 15)src A buyer- or seller-ordered QoE does not satisfy it. |
| Must reconcile | The report reconciles accountant-prepared statements, tax returns, internal financials, general ledger data and IRS transcript data into normalized earnings.(source: SBA SOP 50 10 8.1, Appendix 15)src |
| Cash Proof | A Cash Proof reconciles receipts and disbursements to bank statement data across the trailing twelve months and the two most recent fiscal years.(source: SBA SOP 50 10 8.1, Appendix 15)src |
| Add-backs | Every add-back is documented, including non-recurring items, owner compensation against market, related-party transactions, deferred maintenance, and cash-versus-accrual differences.(source: SBA SOP 50 10 8.1, Appendix 15)src |
| Credit consequence | Adjusted earnings feed the lender's debt-service coverage at a 1.25x floor for acquisitions and owner buyouts and 1.15x for expansions, and projections may not be used to meet it.(source: SBA SOP 50 10 8.1)src If normalized earnings come in low, the loan gets smaller. |
The crosswalk
Rendered into every lender report, so an SBA reviewer or your own credit officer can trace each requirement to its section.
| Appendix 15 requirement | Report section | How the report meets it |
|---|---|---|
| Independent professional engaged by and acting for the lender | Engagement letter §1 | The lender signs the engagement letter and is the only addressee. Borrowers upload documents; they never see findings or the report. |
| Purchase price ≥ $3M net of owner-occupied real estate; category not exempt | §1 Scope & Threshold | Threshold and transaction category are computed from the purchase agreement and appraisal, never asserted. |
| Reconcile statements, returns, internal financials, GL and IRS transcript data | §2 Four-Way Reconciliation | General ledger, bank, filed return and IRS transcript tied at transaction level. Any difference between the filed return and the transcript is escalated at the top of the report. |
| Cash Proof — receipts and disbursements to bank data, TTM and two fiscal years | §3 Cash Proof | Labeled “Cash Proof” on exactly the three windows the SOP names, so the credit analyst can check the box at a glance. |
| Every add-back documented, incl. deferred maintenance and cash-vs-accrual | §4 Adjustment Schedule | All five named categories render on every report, including any with nothing identified, with the basis for that conclusion. |
| Customer concentration, contract continuity, margin sustainability | §5 Revenue Quality | Concentration risk weighted by tenure and contract coverage, retention, and margin stability over 36 months. |
| Adjusted earnings feed DSC at the 1.25× floor; no projections | §6 DSC Bridge | Coverage at the proposed structure, the binding loan constraint, maximum supportable loan, rate stress and adjustment breakeven — historical earnings only. |
| Findings update the credit memo | §7 Credit Memo Insert | A one-page block the analyst pastes into the memo: the DSC figure, the binding constraint and the three findings that move it. |
Scope, fees and turnaround
Fixed fees, quoted before work starts. Never contingent on the deal closing or on price.
- Scope and threshold determination
- Four-way reconciliation, including IRS transcripts
- Cash Proof on the three windows the SOP names
- All five named add-back categories, evidenced
- DSC Bridge with maximum supportable loan
- One-page credit memo insert and workpapers
The turnaround clock starts when the document set is complete. The borrower can generally finance the fee into the loan or count it toward the equity injection; confirm treatment under your own credit policy.
How an engagement runs
Five steps. Tax returns never travel by email.
The lender engages
The lender signs the engagement letter and is the report's only addressee. Threshold and category are computed from the purchase agreement, and conflicts are checked before work starts.
Secure intake
The borrower gets a scoped, upload-only link — no read-back. Ledger and bank connect directly; the business Form 4506-C brings in IRS transcripts. Nothing travels by email.
The engine runs
Four-way tie-out, Cash Proof, adjustment scoring and the DSC Bridge. Every figure carries a provenance record back to the source line.
Credentialed review
A CPA- or CVA-credentialed reviewer with no stake in the deal resolves each judgment item, records every override with its reason, and signs.
Delivery
The signed report, crosswalk and credit memo insert land in the lender's portal — Standard in ten business days — with a verification code anyone holding the file can check.
Founding lender partners
A small number of lenders can join as founding partners: a pilot file at the Standard fee, direct input into the report format and the credit memo insert, and a named contact for every file. Ask on the contact form.
Your vendor review will ask how we handle borrower data.
Data classes, encryption, multi-factor sign-in, tenant isolation, subprocessors and our honest compliance status are on the trust page. The security package is available on request.