Take Five #164: Breaking down the SBA’s SOP 50 10 8 updates, plus a few key changes some buyers might miss, and more
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Take Five #164: Breaking down the SBA’s SOP 50 10 8 updates, plus a few key changes some buyers might miss, and more
1. Customer Concentration Risks: How to Price, Structure, and Spot Red Flags in a Deal
How to Diligence Customer Concentration Risk
Not all instances of customer concentration are created equally. Buyers would be wise to spend a considerable amount of time during the commercial due diligence process coming up with a view on just how acute the risk is in their specific situation.
Below is a non-exhaustive list of variables that buyers may wish to consider:
Per our analysis above:
How profitable is this large customer relative to our other customers?
If the large customer left, how much EBITDA would remain in the business, and what would the effective purchase multiple be on that remaining EBITDA?
For how long have they been a customer?
Over each of the past 3-5 years: Has this customer’s spend with the company increased, decreased, or stayed flat?
Do any of our existing competitors offer this customer a reasonable alternative to our product or service?
Is there a history of similar customers eventually bringing this product or service in-house once they reach a certain scale?
Who “owns” the relationship with this customer internally? Does the relationship reside largely with the selling shareholder (who is likely to exit the business after closing)?
Read the Mineola Search Partners post here.
2. Real-world advice on how to run and grow a service business without overcomplicating it
3. Breaking down the SBA’s SOP 50 10 8 updates, plus a few key changes some buyers might miss
The SOP 50 10 8 has introduced several updates that significantly impact financing thresholds and underwriting rules. These changes require buyers to rethink their acquisition strategies.
7(a) Small Loan Size Limits Reduced to $350,000
One major update is the reduction of the maximum loan size for 7(a) Small Loans from $500,000 to $350,000. This $150,000 decrease has shifted loans above $350,000 into the standard 7(a) category, which comes with stricter underwriting requirements and longer processing times. Transactions in the $350,000 to $500,000 range now demand full underwriting documentation. These changes took effect on June 1, 2025, and apply to loans issued an SBA loan number on or after that date.
For loans at or below the $350,000 mark, expedited processing is available if the borrower achieves a FICO Small Business Scoring Service (SBSS) score of 165 or higher. This adjustment has reshaped how buyers approach financing for smaller transactions.
Return to Pre-2021 Underwriting Standards
Another significant shift is the reintroduction of pre-2021 underwriting standards, which include higher equity injection requirements. These stricter rules limit the use of seller financing and other flexible deal structures that were previously more accessible. Financing methods that worked under the more lenient guidelines may now fall short. Buyers will need to adjust by strengthening equity partnerships, tapping into investor networks, or committing more personal capital to meet these heightened requirements.
4. “A Guide to Small Business Cash Flow: Beware of Your Burn”
Profit can look good on paper, but cash flow tells you whether your business can actually survive the month. You might land a big client and book impressive revenue, but if that client pays 90 days later and you’ve got payroll due next week, you’re stuck.
That’s why cash flow is often a better real-time indicator of your business’s health than net income.
Think of it this way - profit is a story; cash flow is the bank balance. It reveals how much money is actually moving through your business; how fast it comes in, how quickly it goes out, and how much you have left to operate. It’s the difference between being busy and being broke.
Good cash flow management means understanding your inflows and outflows, not just at a high level but in terms of timing. Are you spending before you’re getting paid? Are collections lagging while expenses pile up? These mismatches are where many profitable businesses falter.
Read The Founders Corner post here.
5. Two operators talk about what the first 90 days of business ownership really look like
In this episode of The Intentional Owner, Sam Rosati and Kaustubh Deo talk through what the first 90 days of owning a business actually look like. They cover transition checklists and asset conversion and dig into how to earn trust and find your footing as a new owner. They also discuss why some retention strategies backfire, and how to communicate well with your team and customers post-close.
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