SBA Makes Single-Location and Carve-Out Acquisitions Actually Possible (Here's the Game-Changer in SOP 50 10 8)

Hey there, deal makers! If you're reading this I assume you've either looked at a project where you'd only be buying a PORTION of the parent company's revenue stream.

I've got some fantastic news that's going to make a lot of you very, very happy.

SBA just fixed the headache of single unit purchases with their new SOP 50 10 8 rules, and I'm about to break down exactly how this changes everything.

The Problem That's Been Driving Everyone Crazy

Picture this: You've found the perfect pizza shop to buy. It's part of a small chain where the owner operates four locations under one LLC, files one consolidated tax return, but you only want to buy the location in your neighborhood.

In the past, lenders would look at those consolidated tax returns and basically shrug. How do you know if this one location is profitable? What if the other three locations are propping it up? What if this location is actually the star performer but the numbers are buried in the consolidated mess?

It was like trying to figure out which ingredient makes the pizza delicious when all you have is nutritional info for the entire meal. Frustrating doesn't even begin to cover it.

Many lenders would just say no while some would move forward cautiously but require full audited financials with CPA certification, but there was never any clear guidance from SBA.

Enter SOP 50 10 8: The Solution We've All Been Waiting For

On June 1, 2025, the SBA rolled out new rules that finally address this exact scenario. Buried in Section A, Chapter 5, Paragraph 3 of SOP 50 10 8 is this absolute gem of language:

"For a change of ownership, the SBA Lender must verify the seller's financial data... except when there is an acquisition of a division or a segment of an existing business, the SBA Lender may use alternative forms of third-party verification such as third-party CPA-prepared or reviewed financial statements..."

Translation? When you're buying one location from a multi-location business, or carving out one revenue stream from a larger business, lenders can now accept CPA-prepared/reviewed statements instead of requiring tax returns. Compiled or audited financial statements are also acceptable, but would be the next level.

This is huge, people. HUGE.

What This Means for Your Deal (Spoiler Alert: It's All Good News)

For Buyers:

• No more waiting years for the seller to create standalone financial statements (or just killing the deal all together)
• Faster deal timelines since CPAs can prepare statements much quicker than waiting for tax filings or doing a full audit
• Better accuracy since the CPA statements will reflect just your target location's performance
• More opportunities since sellers are much more willing to work with you on this

For Sellers:

• Easier exit process since they don't need to restructure their entire accounting system
• Maintain privacy for their other locations in some cases
• Faster closings which means they get paid sooner
• More interested buyers since this removes a major barrier

For Lenders:

• Better underwriting data since CPA statements show true location performance
• Reduced liability since CPAs are backing the numbers
• Streamlined process without having to untangle consolidated returns
• Happier clients (that's you!) who can actually get deals done

The Three Flavors of CPA Financial Statements (And Why They All Work)

Think of CPA financial statements like different levels of armor protection – they all work, but some offer more coverage:

1. CPA- Prepared/Reviewed Statements

This is like your basic armor. The CPA takes the business data and puts it into proper financial statement format. They're not auditing the numbers, but they're applying their professional standards to present the information correctly.

When to use: Smaller deals, simpler operations, when speed matters most.

2. CPA- Compiled Statements

This is your mid-tier protection. The CPA does some analytical procedures and inquiries to provide limited assurance that the statements don't contain major errors.

When to use: Medium-sized deals, when lenders want a bit more comfort, when the business has some complexity.

3. CPA-Audited Statements

This is the full suit of armor. The CPA conducts a comprehensive examination and provides reasonable assurance that the statements are free from material misstatement.

When to use: Larger deals, complex operations, when maximum lender comfort is needed.

Real-World Example: How This Just Saved a Deal

Last month, I had a client who started looking into buying four locations of an eight-unit franchise owner. The seller's accountant filed everything under one EIN, and the initial lender said they'd need three years of standalone tax returns. Which meant filing amended and restated returns, and wasn't going to happen. Or, the CPA could file audited returns but they were wanting to charge $60k minimum ($15k per store)

Problem? The seller wasn't willing to wait or pay for these updates, and creating retroactive standalone returns or doing the audit would have taken months.

Under the old rules, this deal would have died right there.

But thanks to SOP 50 10 8, the CPA was able to prepare reviewed financial statements for just the target locations using the business's internal records, bank statements, and operational data. The whole process is set to take three weeks instead of three months, and the deal is moving right through underwriting.

That's the power of this change.

The Step-by-Step Process (Because Details Matter)

Here's exactly how this works in practice:

Step 1: Identify the Situation

• Buyer wants one location from a multi-location business, or carving out one revenue stream from a larger business
• Seller files consolidated tax returns
• Traditional tax verification won't work

Step 2: Engage the Right CPA

• Find a CPA experienced with SBA transactions
• Make sure they understand the scope needed
• Agree on the level of service (compiled, reviewed, or audited)

Step 3: Gather the Data

• Location-specific income and expense records
• Bank statements for location-specific transactions
• Operational data (sales reports, payroll records, etc.)
• Any existing internal financial reports

Step 4: CPA Preparation

• CPA creates standalone financial statements for the target location
• Statements cover the required period (typically 3 years)
• CPA provides their professional opinion/compilation

Step 5: Lender Acceptance

• Submit CPA statements to your SBA lender
• Lender uses these for underwriting instead of tax returns
• Deal moves forward normally from there

What Lenders Are Looking For (Insider Tips)

Having worked with dozens of SBA lenders, here's what I've learned they really want to see in these CPA statements:

The Must-Haves:

• Clean presentation following GAAP standards
• Reasonable assumptions that can be verified
• Consistent methodology across all periods
• Supporting documentation available for review
• Experienced CPA with SBA transaction history

The Red Flags to Avoid:

• Round numbers everywhere (real businesses aren't that neat)
• Unrealistic margins compared to industry standards
• Missing periods without good explanations
• Inconsistent accounting methods between years
• CPA with no SBA experience (they might not know the nuances)

The Bottom Line: This Changes Everything

Look, I've been doing SBA loans for over a decade, and SBA has never been specific about what types of financial statements would suffice in these types of deals. So, most lenders either wouldn't do them at all OR they defaulted to requiring full audited statements.

This isn't just a small tweak – this opens up an entire category of deals that were previously impossible or prohibitively difficult.

If you're a buyer, this means you can seriously consider single-location and carve out acquisitions that you might have dismissed before.

If you're a seller, this makes your individual locations much more attractive to buyers, potentially increasing your exit value.

If you're an advisor or broker, you've got a whole new tool in your arsenal for making deals work.

What's Next? (Don't Just Sit There – Take Action!)

If you've got a single-location or carve out acquisition opportunity sitting on your desk that you thought was dead because of the financial statement issue, dust it off. Seriously.

Call the seller, explain this new option, and see if they're willing to work with a CPA to prepare location-specific statements. You might be surprised how quickly a "impossible" deal becomes very doable.

And if you're not sure how to navigate this process, or you want to make sure you're working with SBA lenders who actually understand these new rules (hint: not all of them do yet), give us a shout.

We've already helped several clients use this new provision successfully, and we'd love to help you turn your single-location acquisition dream into reality.

The SBA just handed you the keys to deals that were locked away before. Don't waste the opportunity.

Ready to explore your single-location acquisition options? We know exactly which lenders are embracing these new CPA statement rules and how to structure your deal for success. Get started with our pre-qualification process and let's make your acquisition happen.

Frequently Asked Questions

Q: Will this work for any type of business?
A: Yes! The SOP language doesn't restrict by industry. Whether it's restaurants, retail, services, or manufacturing – if you're buying a "division or segment" of an existing business, this applies.

Q: How much do CPA statements typically cost?
A: Reviewed statements may run $3,000-$8,000, compiled statements $5,000-$15,000, and audited statements $10,000-$25,000. Expensive? Sure. But way cheaper than losing a great deal or waiting years for proper tax returns. And now, the cheapest option is generally sufficient.

Q: Do all SBA lenders accept this yet?
A: Most do, but some are still getting up to speed on the new rules. This is why working with SBA specialists (like us!) makes such a difference – we know which lenders are already on board.

Q: What if the seller refuses to provide the data for CPA statements?
A: Then they probably weren't serious about selling anyway. Any legitimate seller should be willing to provide this information to a qualified buyer under appropriate confidentiality agreements.

Q: Can this be used for franchise acquisitions too?
A: Absolutely! This is especially helpful for franchisees who want to buy just one location from a multi-unit operator.

This article is based on SBA SOP 50 10 8, effective June 1, 2025. SBA policies can change, so always verify current requirements with your lender or SBA specialist.

‍