SBA Information Notice 5000-882227

SBA Information Notice 5000-882227

Effective 2026-10-01 · publisher's stamp for this provision

SBA Information Notice TO: All SBA Employees, 7(a) Lenders, Certified Development Companies, Applicants, and Borrowers of the 7(a) and 504 Loan Programs CONTROL NO.: 5000-882227 EFFECTIVE: October 1, 2026 PUBLICATION: September 25, 2026 SUBJECT: Issuance of Technical Updates to SOP 50 10 8.1 The purpose of this Notice is to inform 7(a) Lenders, Certified Development Companies (CDCs), together known as “SBA Lenders,” SBA employees, and 7(a) and 504 Loan Program Applicants and Borrowers of the issuance of technical updates to Standard Operating Procedure (SOP) 50 10 8.1, Lender and Development Company Loan Programs. The SOP 50 10 8.1, Lender and Development Company Loan Programs with Technical Policy Updates supersedes the version previously published but not yet effective. This updated version of the SOP is effective October 1, 2026, and will apply to all applications received1 by SBA on or after that date. SBA Lenders and SBA employees must continue to use SOP 50 10 8 for 7(a) and 504 applications submitted through September 30, 2026. In response to feedback received from stakeholders, SBA is providing additional guidance for clarity. Users are advised to fully read SOP 50 10 8.1 to ensure understanding of all changes. The principal changes are summarized below. SECTION A: CORE REQUIREMENTS FOR ALL 7(A) AND 504 LOANS Chapter 5: Other Core Requirements Trustor Guaranty requirements: When one or more trusts (revocable or irrevocable) own, in the aggregate, 20% or more of the applicant, each trust must provide an unlimited full guaranty. The trustee must execute the guaranty on behalf of the trust and provide the certifications required. In addition, when a trust guaranty is required, the Trustor must also personally guarantee the loan. All donors to the trust will be deemed to have Trustor status for eligibility purposes. 1 SBA is in the process of updating application forms to correspond with SOP changes. Until updated application forms are available, SBA Lenders must collect all required information and certifications as required by the existing forms and SOP 50 10 8.1 Technical Policy Updates and retain them in the loan file. PAGE 1 of 3 EXPIRES: 10/1/27 SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete Must be accompanied by SBA Form 58 Federal Recycling Program Printed on Recycled Paper SECTION C: 504 LOAN PROGRAM SPECIFIC REQUIREMENTS Chapter 1: Eligibility Through Submission of Application 504 Third Party Lender Underwriting Submission: Updated the requirement for TPL’s underwriting analysis. The TPL may submit the underwriting analysis directly to SLPC. Direct upload features will be available in the future. 504 Third Party Lender Loan Term: Removed the prohibition against the amortization of the Third Party loan exceeding the 504 debenture term. Collateral: Expanded guidance on 327 requirements for when an indemnification provision (non- environmental) is present in the title records. APPENDICES Appendix 15: 7(a) Changes of Ownership 7(a) Small & SBA Express Loans: The use of 7(a) Small and SBA Express loans for changes of ownership is permitted, subject to requirements in Appendix 15, and except for the following specific requirements applicable to 7(a) Small and SBA Express loans. • An internal business valuation is permitted when the Business Purchase Price is $350,000 or less. • The loan must comply with all Appendix debt service coverage (DSC) requirements, including the applicable minimum DSC standard and required cash flow analysis. No reduced or alternative DSC standard applies solely because the loan is a 7(a) Small or SBA Express loan. • The loan must meet Appendix 15’s fully secured definition. However, unlike the general fully secured analysis, the lender is not required to include other held commercial real estate of the borrower or guarantors when determining if the loan is fully secured. Working Capital Adjustments (True-Up): Working-capital adjustments in the purchase and sale agreement are not treated as seller rebates and may be treated as cash to the Borrower. Special Purpose Properties: A “Special Purpose Property” is a limited-market property with a unique physical design, special construction materials, or a layout that restricts its utility to the specific use for which it was built. Change of Ownership transactions involving the acquisition of an owner-occupied Special Purpose Property and the business operating from that property may have a single loan with an amortization which exceeds 10-years, up to a 25-year term when the value of the property is substantially dependent on the operation of the acquired business. This exception only applies when the acquisition of the Special Purpose Property is integral to the acquisition and continued operation of the business. PAGE 2 of 3 EXPIRES: 10/1/27 SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete Must be accompanied by SBA Form 58 Federal Recycling Program Printed on Recycled Paper Quality of Earnings: A Quality of Earnings report already prepared for the Applicant may be used if accompanied by a reliance letter or secondary review by a different firm. The report may not be prepared by or for the seller. For Cash Proof requirements, if the business has been operating for less than 2 years, the QoE report must use the information for all years in operation. Appendix 17: 7(a) Loan Maturity Requirements Mixed Purpose Loans: When 7(a) loan proceeds are used for multiple purposes (land and building, working capital, machinery and equipment), or the refinancing of any of these purposes, the maturity may be a blended maturity or, if 51% or more of the use of the 7(a) loan’s proceeds are for real estate, the maximum maturity may be up to 25 years. Farming Real Estate: When land and structures for farming comprise at least 51 percent of proceeds and the real-estate use includes construction or renovation, a reasonable construction or renovation period may be added to the 20-year maximum maturity. Appendix 19: 7(a) Collateral Requirements Reinserted language from SOP 50 10 8 related to collateral requirements. Appendix 20: Submission of Application for Guaranty Working Capital CAPLine Field Examination: The annual field examination requirement applies when a Working Capital CAPLine is $1,000,000 or greater. Questions 7(a) Lenders can submit questions on the SOP update 7aQuestions@sba.gov. CDC and TPL Lenders can submit questions to 504Questions@sba.gov. Thomas Kimsey Associate Administrator Office of Capital Access PAGE 3 of 3 EXPIRES: 10/1/27 SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete Must be accompanied by SBA Form 58 Federal Recycling Program Printed on Recycled Paper

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