Venturize

New changes to SBA loans and programs for small businesses: What you need to know

The U.S. Small Business Administration (SBA) has recently made significant changes to their small business loan programs. These loan programs help level the playing field and boost access to credit for smaller businesses. Read below for more information about those changes and what you can expect.

Changes to SBA’s signature 7(a) and 504 Loan Programs

  • Effective March 1, 2026, the Small Business Administration (SBA) is changing who can qualify for its 7(a) and 504 small business loans. Under the new rules, a business must be entirely owned by U.S. citizens or U.S. nationals to be eligible. This means that Lawful Permanent Residents (green card holders), visa holders, and other non-citizens are no longer allowed to own any part of a business that applies for an SBA-backed loan, even if they live in the U.S. and legally operate a business here. A previous rule that allowed 5% of foreign ownership has been eliminated. The changes also affect who can be involved in running the business and how loans are reviewed. What’s changed:
    • All direct and indirect owners must be U.S. citizens or nationals residing in the U.S. or a U.S. territory
    • Rule extends to key employees such as officers, directors, foreign investors and employees who manage daily operations
    • Lawful Permanent Residents (green card holders), visa holders, and other non-citizens can no longer hold any percentage ownership in a business seeking SBA loan
    • The policy revokes a recent exception that allowed up to 5% ownership by foreign nationals and U.S. citizens, U.S. nationals or Lawful Permanent Residents whose principal residence is outside the United States
    • Lenders must verify citizenship status and screen for ineligible owners
    • Stricter fraud reviews and background checks are now mandatory for all applicants
  • Available October 1, 2025, the SBA’s new 7(a) Manufacturers' Access to Revolving Credit (MARC) loan program will offer working capital for small businesses engaged in manufacturing. The loan limit is $5,000,000, with the SBA guaranteeing 85% of loans up to $150,000 and 75% for loans above that up to the maximum.
  • Starting October 1, 2025, the upfront SBA Guaranty Fee and the annual SBA Servicing Fee for 504 loans to manufacturers will be 0%. This allows manufacturers to finance long-term assets with no SBA-related guaranty fees for the entire life of the loan. Additionally, the upfront SBA fee for 7(a) loans of $950,000 or less will be 0% for manufacturers. This includes loans through the Community Advantage program.
  • Lenders administering a MARC loan as an asset-based loan may charge an annual extraordinary servicing fee not to exceed 2% of the outstanding balance, which may be changed independently of any fees the bank charges for similar lines of credit.

SBA 7(a) small loan underwriting updates 

The SBA is making changes to how it evaluates 7(a) small loans and moving away from using the Small Business Scoring ServiceSM Score to determine eligibility. These updates will affect underwriting procedures beginning March 1, 2026.

  • Effective March 1, 2026, the SBA is discontinuing use of the FICO® Small Business Scoring ServiceSM Score (SBSS Score)
  • In the absence of SBSS Scores, the SBA is updating the 7(a) Small loan underwriting procedures in SOP 50 10 8.
  • Lenders will use generally accepted industry credit analysis processes and procedures consistent with those used for the Lender’s similarly-sized, non-SBA guaranteed commercial loans. These policies and procedures may include credit scoring models that are permitted by the Lender’s primary Federal regulator.
  • Loans approved before 11:59pm ET on February 28, 2026, may continue to use SBSS.
  • SBA Express loans are not impacted.

New Standard Operating Procedures

Small business owners will have more access to funding through the SBA now that the agency is broadening their network of lenders and streamlining lender procedures. To do so, the SBA has developed three Standard Operating Procedures that took effect on August 1.

The most notable changes have been listed below.

  • Streamlined loan processing times for those seeking SBA-backed products.
  • Background and fraud checks once performed by lenders will now be conducted by the SBA.
  • Collateral is no longer required for loans of $50,000 or less, but personal guarantees are still in place.
  • The SBA will now provide small-business FICO scores on all 7(a) loans under $500,000, except for a few specific loans. Before, the lender had to provide those scores.
  • Simplified underwriting for loans of $500,000 or less, raised from the previous $350,000.
  • Lenders are now allowed to charge up to $2,500 in origination fees. Before, lenders could not charge origination fees.
  • An earlier change also allows business owners with SBA loans to sell a portion of their business, which can be a great way for an aspiring entrepreneur to dip their toes into business ownership and learn alongside experienced entrepreneurs. 
  • Merchant Cash Advances are no longer eligible for refinancing through SBA backed or SBA guaranteed lending products (including at CDFIs or community banks). Additionally SBA backed loan products offered via a CDFI or lender are no longer allowed to go towards refinancing bad debt from an MCA lender.

Access the Standard Operating Procedures (SOP) below.

Lender and Development Company Loan Programs

SOP 50 10 contains SBA’s policies and procedures governing the 7(a) and 504 loan programs.

Lender participation requirements

SOP 50 56 1 defines criteria for becoming an SBA Lender; types of delegated authority; a brief overview of how SBA conducts oversight of SBA Lenders; processes for loan reporting, Secondary Market transactions, loan transfers, and securitization.

7(a) Loan Servicing and Liquidation

SOP 5A will begin accepting the Universal Purchase Package (UPP), which will streamline the process for lenders to request the SBA to honor loan guaranties, and SBA will introduce new features in E-TRAN, SBA’s online platform used by lenders to upload loan applications.

You can review a full list of changes here.

Changes to the SBA’s Disaster Lending Program

With increasing natural disasters occurring across the nation, small businesses are bearing the brunt of climate change and losing their homes and businesses. Read below to find out how business owners affected by events such as earthquakes, floods, fires, hurricanes and tornadoes will benefit from changes to the disaster loan programs.

Among the most notable changes are:

  • Loan limits to cover the cost of lost personal property, including clothing, furniture, appliances, automobiles, and more for home disaster loans will also increase from $40,000 to $100,000. This applies to individuals impacted by natural disasters, including small business owners.
  • To help disaster survivors rebuild and recover, the SBA is now providing an initial payment deferral period. This will extend the first payment from five to twelve months for all disaster loans.
  • In addition to the initial deferment period on initial payment, all disaster loans will waive interest accrual for the first twelve months of the initial disbursement. 
  • The SBA will also clarify collateral requirements for disaster loans to better determine which loans will have blanket liens on commercial assets.
  • Homeowners, not just business owners, will see an increase in loan limits to cover costs of home repairs or replacements, contractor malfeasance, refinancing, and mitigation for primary residences, from $200,000 to $500,000.
  • For disaster loan reconsideration or appeal requests, the SBA will no longer request financial statements, as each loan applicant already provides such financial statements at the time of loan application.
  • The SBA will now expand eligibility of disaster loans to consumer or marketing cooperatives, which aligns disaster lending with SBA’s 7(a) and 504 business loan programs and allows these cooperatives to apply for the Economic Injury Disaster Loan (EIDL) and Military Reservist Economic Injury Disaster Loan (MREIDL) programs.

You can review a full list of changes here.

Changes to SBA’s 8(a) Eligibility Requirement

As a result of the COVID-19 pandemic, the SBA had set in place a Bona Fide Place of Business (BFPOB) Requirement Moratorium on the 8(a) Business Development Program in 2021. This meant that participants in the 8(a) Business Development Program could forgo the requirement of having an established physical presence in a particular location to be awarded any construction contract. Now, the SBA is extending that moratorium until September 30, 2024 to allow small and disadvantaged businesses to continue to start, operate and grow their businesses. 

To learn more about the announcement, click here.