What’s New in SBA SOP 50 10 8 (Effective June 1, 2025)
The Small Business Administration’s updated Standard Operating Procedure (SOP 50 10 8) introduces significant changes to how it will manage 7(a) and 504 loans. Here’s what to watch for, straight from SBA guidance and procedural notices:
1. Equity Injection & Seller Note Restrictions
Startups and ownership transfer deals now require a minimum 10% equity infusion. Notably, seller promissory notes can only be counted if they remain on full standby for the entire loan term and comprise no more than 50% of the required down payment.
2. No More Asset-Based Partial Ownership Deals
Partial change-of-ownership structures are limited to stock transactions only. If a seller retains ownership, even if it’s under 20%, they must guarantee the loan for two years, thereby raising the lender’s assurance level.
3. Higher Score, Lower Loan Threshold
The minimum SBSS (Small Business Scoring Service) score now climbs from 155 to 165. And where small 7(a) loans were capped at $500K, that limit now drops to $350K.
4. Franchise Directory Is Back
Effective June 1, they reinstated the SBA Franchise Directory. Franchisors and distributors must sign renewed certifications by July 31 to remain eligible for SBA-backed loans.
5. Citizenship Requirements & Ownership Lookback
All beneficial owners must be U.S. citizens or lawful permanent residents of the U.S. The SBA now enforces a six-month ownership verification period, ensuring ongoing compliance.
6. “Credit Elsewhere” Test Returns
The requirement that borrowers demonstrate they cannot obtain reasonable financing elsewhere is back in full force. This reinstates a key underwriting safeguard.
7. Documentation Requirements Reinstate
Several documentation steps that were dropped in recent years are now required again. Lenders must verify tax transcripts, make sure borrowers have hazard and life insurance in place, and complete standard closing forms (like Form 1050). Also, they eliminated Form 601.
8. Environmental Review Clarity & Centralization
SOP 50 10 8 refines how they handle environmental checks:
- Non-contaminated properties: certify in E-Tran and retain the report in your file
- Contaminated sites: upload documentation and notify SBA via E-Tran and email, now requiring legal review
- These procedures are now crystal clear and fully centralized.
What This Means for You
These SOP changes restore rigorous, pre-2021 SBA lending standards. Loan eligibility, underwriting, documentation, and compliance receive renewed focus. The good news? Prepared professionals win.
At Phoenix, we’ve been driving these standards operationally for years. Ready to navigate SOP 50 10 8 with clarity and confidence? We’re here to guide you.