I support the Small Business Administration’s responsibility to maintain strong controls over its loan guarantees. Taxpayers deserve protection, banks must underwrite responsibly, and a business acquisition should rest on earnings that can support the debt.
But I am concerned that the direction of SBA lending policy could make it harder for retiring business owners to realize the value they have spent decades building. For many baby boomer owners, the business represents a substantial part of their retirement. They
have reinvested profits, personally guaranteed obligations, and carried the responsibility of meeting payroll through difficult years. Their ability to convert that investment into financial security often depends on finding a qualified buyer who can obtain financing.
The timing matters. McKinsey’s February 2026 research estimates that approximately six million small and medium-size businesses will face ownership transitions by 2035 as baby boomers retire. Those transitions will include sales, family transfers, and closures. Keeping viable companies operating under new ownership should be an economic priority. [1]
SBA-backed lending is an important part of that process. In BizBuySell’s third-quarter 2026 survey, 78% of prospective buyers said they expected to use SBA financing to complete an acquisition. That is a measure of buyer intentions, rather than completed transactions, but it demonstrates how heavily this market depends on access to guaranteed credit. [2]
Recent changes deserve scrutiny in that context. SOP 50 10 8.1, effective October 1, 2026, requires independent Quality of Earnings reports for certain initial acquisitions and business expansions with a business purchase price of at least $3 million, excluding applicable owner-occupied real estate. The lender must use the report’s earnings findings to determine debt-service coverage. If those earnings cannot support the proposed debt, the financing must be reduced or additional equity provided. [3]
There is a sound reason to verify earnings. A careful review can protect the buyer, expose
unsupported adjustments, and prevent an acquisition from failing under excessive debt. Accurate diligence can also strengthen a seller’s position by establishing that the business’s earnings are dependable. My concern is how these requirements are designed and administered, and whether their cumulative burden exceeds the protection they provide.
Financing conditions affect what an owner can receive at closing. If a capable buyer cannot secure sufficient financing, the seller may have to accept a lower price, carry more of the purchase price through a seller note, postpone retirement, or lose the transaction entirely. A seller note also leaves the retiring owner exposed to the buyer’s future performance when the owner had expected to receive cash and reduce risk. That is how tighter lending can erode access to accumulated business value.
The company may still have customers, employees, and dependable operating earnings, yet the market of buyers able to finance its purchase becomes smaller. Wealth that appears on a valuation report offers limited retirement security if the owner cannot realize it through a sale. As buyers weigh financing costs and economic uncertainty, I believe policymakers should be especially careful about adding friction to business transfers. An owner approaching retirement may have limited time to wait for better conditions. A failed transfer can also put employees, supplier relationships, and the continuity of a local business at risk.
I would like the SBA to preserve rigorous earnings verification while making compliance
proportionate to the transaction’s size and risk. Lenders should coordinate documentation requests and use acceptable existing diligence where the rules permit. Owners and buyers need clear requirements early enough to address problems before they have committed substantial time and money.
The agency should also track the effects of its changes on approval times, transaction costs, and viable acquisitions that fail to close. Protecting the guarantee program requires attention to losses. Serving small businesses also requires attention to whether responsible buyers can obtain credit. Baby boomer business owners have spent years creating enterprises that employ people and serve their communities. They deserve a fair opportunity to sell those businesses at a value supported by their earnings. The SBA should protect taxpayers while preserving a workable path for those owners to turn a lifetime of investment into retirement security.
Sources
[1] McKinsey Institute for Economic Mobility, The Great Ownership Transfer, February 26, 2026.
[2] BizBuySell, Q3 2026 Insight Report, buyer survey and acquisition-financing discussion.
[3] U.S. Small Business Administration, SOP 50 10 8.1 with Technical Updates, effective October 1, 2026, Appendix 15.