When You Need a CPA Comfort Letter for an SBA Loan

Q: When do you need a CPA comfort letter for an SBA loan?

You may need a CPA comfort letter for an SBA loan when the lender requests additional third-party support to clarify or document specific financial information during underwriting—especially if there are gaps in records, complex income sources, unusual transactions, or lender-required confirmations tied to projections, cash flow, or borrower financial capacity. A CPA comfort letter should be narrowly written to match the lender’s exact request and confirm only what can be supported by documentation (financial statements, tax returns, schedules, and reconciliations). It does not guarantee loan approval, repayment ability, or future performance, and it should not imply assurance beyond the scope of records reviewed.

1. Overview

A CPA Comfort Letter for an SBA loan is a letter that supports information you have provided to an SBA lender. It is not a guarantee or verification of your financial success—it is a carefully worded letter that confirms specific items a CPA is allowed to state under professional standards.

Many SBA lenders require a CPA’s involvement when reviewing a borrower’s application, financial statements, tax filings, or projections. These letters follow strict AICPA rules to avoid implying assurance or making statements a CPA is prohibited from giving. A well‑crafted comfort letter can speed up your loan approval and help the lender gain confidence in your financial information.

2. Who Needs This & When

You may need a CPA comfort letter when you are:

• Applying for an SBA 7(a) loan or SBA 504 loan

• Renewing or increasing an existing SBA-backed loan

• Providing additional documentation for underwriting

• Asked to clarify information in your financial statements or tax filings

• Submitting CPA-prepared projections or a business plan

Common reasons a lender may request a comfort letter:

• To confirm that your financials were prepared by a CPA

• To confirm that your financials follow GAAP

• To clarify that the CPA has no knowledge of fraud or misstatements

• To state whether the CPA prepared tax returns or financial statements

• To outline procedures performed, if any

Comfort letters are often needed at the underwriting stage and sometimes again before closing.

3. Common Real‑World Scenarios

A CPA comfort letter is typically used when:

• A lender wants written confirmation that your financial statements were compiled or reviewed by a CPA.

• A lender needs a CPA to confirm that tax returns were prepared based on information you provided.

• You submit cash flow projections, and the lender wants a CPA letter describing how those projections were prepared.

• You run a startup, and the lender wants confirmation that your accounting records were organized and prepared properly.

• You have multiple entities, and the lender wants clarity on ownership, structure, or consolidation.
  

SBA lenders vary, but most follow consistent standards on what CPAs can and cannot say.

4. Regulatory / SBA Background

SBA lenders operate under:

• SBA SOP 50 10 (governing procedures for underwriting)

• Additional bank‑level credit policies

• AICPA standards that restrict what CPAs may and may not state in comfort letters

CPAs must avoid:

• Providing assurance unless an audit or review was performed

• Guaranteeing repayment ability

• Stating solvency or net worth

• Predicting the future

Instead, CPAs may:

• Describe services performed (e.g., tax prep, compilation)

• Confirm that financials were prepared under a specific basis of accounting

• State factual information observed during their work

• Provide general statements about whether they have knowledge of misstatements

5. Industries Where This Is Most Relevant

CPA comfort letters are commonly requested when applying for SBA loans in:

• Construction & contracting

• Real estate & property companies

• Restaurants and hospitality

• Healthcare practices

• Retail, e‑commerce, and wholesale

• Transportation & logistics

• Professional services

  
  

Any business applying for SBA financing may require one.

6. Why a CPA Is Typically Involved

Lenders prefer a licensed CPA because:

• CPAs follow strict ethics and professional standards

• CPAs can describe financial information objectively

• CPAs can clarify how financial statements and tax returns were prepared

• CPA involvement increases lender confidence—and speeds up approval
  

SBA lenders often require CPA letters because they want professional verification of process, not verification of outcome.

7. What the CPA Actually Does / Documents Needed

To prepare a comfort letter, the CPA may need:

• Recent financial statements

• Prior tax returns

• Your accounting records

• Loan application materials

• Any financial projections submitted to the lender

• The lender’s requested letter language

Typical CPA steps include:

1. Review lender requirements and remove any prohibited statements.

2. Confirm the work performed, such as:

   • Tax preparation

   • Compilation

   • Review

   • Advisory support

3. Draft the comfort letter with compliant language.

4. Communicate directly with the lender, if needed, to align expectations.

8. Deliverables (with Illustrative Excerpt)

The deliverable is a CPA Comfort Letter customized to the lender’s request.

Illustrative excerpt:

“We prepared the 2023 and 2022 financial statements of ABC Company in accordance with accounting principles generally accepted in the United States of America (GAAP). We did not audit or review the financial statements and, accordingly, do not express an opinion or assurance. We prepared the company’s federal income tax returns for the years ended December 31, 2023 and 2022, based on information provided by management. We are not aware of any material modifications that should be made to the accompanying financial information.”

This sample avoids prohibited language while giving lenders the clarity they need.

9. Timeline & Fee Ranges

Approximate timelines:

• Simple letters (tax confirmation only): 2–5 business days

• Letters tied to compiled or reviewed statements: 5–10 business days

• Letters requiring cleanup or projections: 1–3 weeks

Fee ranges depend on complexity:

• Basic comfort letters: $350 – $1,000

• Financial statement‑based letters: $750 – $2,500

• Letters requiring additional procedures: $2,500 – $7,500+

Since lenders differ in their requirements, fees vary accordingly.

10. Common Mistakes & Misunderstandings

• Expecting CPAs to guarantee loan repayment (not allowed)

• Asking CPAs to verify income without performing proper work

• Requesting statements CPAs cannot legally provide

• Submitting incomplete financial records

• Giving the CPA lender requests too late in the loan process

Understanding limitations early prevents delays.

11. How Jedidiah CPA Can Help

Jedidiah CPA can help you:

• Understand exactly what your lender needs

• Clean up and prepare financials before submission

• Coordinate with your SBA lender to agree on acceptable language

• Draft lender‑compliant comfort letters

• Provide CPA‑prepared statements or projections if required

Our goal is to help you move through underwriting smoothly and give your lender the clarity they need.

Whenever an engagement requires independence under professional standards, Jedidiah CPA cannot perform bookkeeping, financial statement preparation, or management functions for the same client during the period of that engagement.

CPA comfort letters are subject to strict professional standards. A CPA may confirm factual historical details but cannot guarantee solvency, future performance, or loan repayment. In addition, if the CPA is acting as the client’s internal accountant, CFO, or bookkeeper, issuing a “verification” or “comfort” letter may impair independence or objectivity. In such cases, an independent CPA should be engaged solely to provide the letter.

Disclaimer

This article is for general informational purposes only and does not constitute accounting, tax, legal, or professional advice. CPA Comfort Letters are regulated by the AICPA and may only be issued under a formal engagement after confirming independence and scope. Requirements vary by lender, jurisdiction, and specific circumstances. You should consult a qualified professional about your particular situation.

FAQs

Why do SBA lenders request CPA comfort letters?

To reduce underwriting uncertainty and get clearer documentation around specific financial items, such as income consistency, business performance, or the support behind certain figures.

What can a CPA typically confirm in an SBA comfort letter?

A CPA can usually confirm factual information supported by records—such as figures from tax returns or financial statements, the period covered, and what documents were reviewed.

What can a CPA not confirm?

A CPA generally cannot guarantee approval, future cash flow, repayment ability, or certify outcomes. They also can’t provide assurance that goes beyond what documentation supports.

What documents should you prepare for a CPA comfort letter request?

The lender’s written request/template, tax returns, year-to-date financial statements, reconciliations, debt schedules, bank statements, and any projection support if the lender is asking about forecasts.

How can you avoid delays with an SBA comfort letter?

Ask the lender for exact wording early, keep the request narrow, provide complete documents upfront, and ensure the lender understands what a CPA can and cannot state.

Other quick FAQs

1. What can a CPA verify for an SBA lender? Revenue, tax filings, financial statement preparation, and other factual data.

2. What can a CPA not verify?Future performance, repayment ability, or guarantees.

3. Why do lenders request comfort letters?For additional assurance during underwriting.

4. How long does the process take?Typically 3–7 business days once documentation is complete.

5. How much does a comfort letter cost?Depends on scope and required verification.