SBA SOP 50 10 8 Key Changes

On April 22, 2025, the SBA released Information Notice 5000-866746 introducing SOP 50 10 8, an overhaul of the SBA 7(a) program that will take effect June 1, 2025. While much of the SOP restores pre-2021 lending policies, it also brings major changes to equity injection rules, partial buyouts, and borrower eligibility.

Below, we break down the most important updates and how they affect SBA lenders, borrowers, and the business valuation process.

1. Key Changes to Equity Injection Requirements

Buyers must now inject at least 10 percent equity into SBA 7(a) deals for both startups and changes of ownership. However, not all equity sources are treated equally:

• Seller notes must be on full standby for the entire loan term, typically 10 years, to count toward the injection.

• Seller notes may only cover up to half of the required equity injection.

• These conditions make seller financing much less practical in many transactions.

2. Stricter Guidelines for Partial Ownership Transfers

The updated SOP places firm limits on partial buyouts:

Structure Restrictions
All partial ownership changes must be structured as stock purchases. Asset purchase structures are no longer allowed.

Investor Guarantees
All equity holders in partial ownership transfers must personally guarantee the loan for a minimum of two years, regardless of the size of their ownership.

Rollover Equity Eliminated
If a seller retains equity, they are still considered an owner and must personally guarantee the loan for two years. This effectively eliminates the use of seller rollover equity in SBA-financed transactions.

3. CPA Financial Statements May Now Be Accepted

In certain cases, SBA lenders may accept CPA-prepared or reviewed financial statements instead of tax returns. This provides additional flexibility for borrowers who maintain accurate books but may not have current tax filings. Lenders are still responsible for verifying the accuracy of all financials used in underwriting.

4. SBSS Score Threshold Reinforced for Small Loans

For SBA 7(a) Small Loans under $350,000:

• A FICO SBSS score of 165 or higher qualifies the loan for expedited processing.

• Loans with scores below 165 must be submitted as standard 7(a) loans or under the SBA Express program.

5. PLP Lenders Expected to Use Delegated Authority

Lenders with Preferred Lender Program (PLP) status are now expected to process most loans under delegated authority. Exceptions are limited, such as refinances of same-institution debt. Borrowers can confirm a lender's PLP status through SBA directories or lender match tools.

6. Stricter Ownership Requirements for Non-U.S. Citizens

Businesses must now be 100 percent owned and controlled by U.S. citizens, lawful permanent residents, or qualified U.S. Nationals. Transactions involving foreign ownership will require additional diligence and supporting documentation.

7. Franchise and Documentation Standards Reinstated

Additional SOP revisions include:

• The return of the SBA Franchise Directory, which removes the need for SBA review of franchise documents when the brand is listed.

• A clear prohibition on transactions where a franchisor or management company exercises full operational control.

• Reinstated requirements for tax transcript verification, hazard insurance, and life insurance coverage.

8. Summary: Reduced Flexibility, Increased Scrutiny

SOP 50 10 8 significantly narrows the deal structures available to borrowers. Seller notes are harder to use. Rollover equity is no longer allowed. Personal guarantees are required more broadly. Buyers without sufficient personal capital will need to seek alternative sources of equity, creating opportunities for outside investors to support deals.

How This Affects Business Valuations

With more scrutiny on deal terms, lenders are placing greater reliance on independent valuations to support loan decisions. Concluded's SBA-compliant business valuations are designed to withstand regulatory review, provide support for underwriting, and move deals forward with confidence.

Effective Date: SOP 50 10 8 applies to all SBA loan applications submitted on or after June 1, 2025.

Need support with valuations under the new SOP? Reach out to Concluded or order your SBA valuation today.

Disclaimer: This article reflects our interpretation of SOP 50 10 8 at the time of publication. SBA policies may evolve and are subject to lender interpretation. Always consult your lender and legal counsel for deal-specific guidance.