SBA 7a Loan Info

SOP 50 10 8 governs the SBA 7(a) loan program and includes updates such as a new master certification for franchisors, a 10% equity injection requirement for ownership changes, and a focus on restoring financial stability and improving loan quality. The document provides lenders with policies and procedures for originating loans and is a crucial reference for understanding loan eligibility, terms, and the required documentation to support small business growth.

Key bullet points from the SOP 50 10 8 updates:

Franchisor and distributor updates: A single master certification from the franchisor replaces the need for individual loan applicants to submit an SBA franchise addendum, streamlining the application process.
Equity injection for ownership changes: A 10% equity injection is now required for complete changes in ownership.
Seller notes: Seller notes can be used as part of the equity injection, but they cannot exceed 50% of the required injection (or 5% of the total project cost).
Standby requirements: Seller notes must be on full standby for the life of the SBA loan.
Loan quality and stability: The new guidelines aim to improve the quality of SBA loans and promote sustainable lending practices.
Documentation and compliance: Borrowers and lenders should prepare for new guidelines by updating internal processes, training staff, and providing detailed documentation to ensure compliance.
SBA loan programs: SOP 50 10 contains the policies and procedures for both the 7(a) and 504 loan programs.

SBA SOP update June 1st 2025. Key Bullets points below.

1. How do I apply for a SBA Loan Guarantee?

SBA has three different loan programs. Each of the programs is designed to cover a variety of business needs, thus providing the most options to small businesses. (More on SBA’s Loan Programs:) As the programs are delivered by SBA’s partners and are not direct loans from SBA, businesses should consult their District offices or contact the lending partners in their area before filling out any applications. Contact a SBA Loan Broker or lender and discuss your loan proposal with one of their loan officers. Be prepared to discuss your proposal in detail with the lender. You should have the following available for the lenders review: your business plan; your personal financial statements; your business financial statements (if already a business); collateral available to secure the loan; assumptions used in your projected earnings statements; management resumes of those involved in operating the business; and pro-forma balance sheets showing what the business would look like if the loan were granted. Be prepared to discuss your proposal in detail with the lender.

2. What do I need to qualify for a SBA Loan?

In order to get a 7(a) loan, the applicant must first be eligible. Repayment ability from the cash flow of the business is a primary consideration in the SBA loan decision process but good character, management capability, collateral, and owner's equity contribution are also important considerations. All owners of 20 percent or more are required to personally guarantee SBA loans.

3. What type of collateral do I need for a loan?

Repayment ability from the cash flow of the business is a primary consideration in the SBA loan decision process but good character, management capability, collateral and owner’s equity contribution are also important considerations. All owners of twenty percent (20%) or more of the business are required to personally guarantee the SBA loan. The SBA does not deny approval for a SBA guarantee loan solely due to lack of collateral; however, it can be used as a reason, in addition to other credit factors.

4. How does the SBA guarantee loan program work?

Under the guaranty concept, commercial lenders make and administer the loans. The business applies to a lender for their financing. The lender decides if they will make the loan internally or if the application has some weaknesses which, in their opinion, will require an SBA guarantee if the loan is to be made. The guarantee which SBA provides is only available to the lender. It assures the lender that in the event the borrower does not repay their obligation and a payment default occurs, the Government will reimburse the lender for its loss, up to the percentage of SBA's guaranty. Under this program, the borrower remains obligated for the full amount due.

5. Where do I obtain an application for a SBA loan?

Applications have been provided by SBA to all lenders that actively participate with us. Applications can be obtained from the lender you will be working with.

6. What is the interest rate on SBA loans?

SBA does not set the interest rate on the loans, only the maximum rate the bank may charge. The actual rate is negotiated between the lender and the borrower.

7. How long do I have to repay a SBA loan?

The repayment term is generally between five and twenty-five years depending on the life of the assets being financed and the cash needs of the business. Working capital loans (inventory and accounts receivable) should be repaid in five to ten years. The SBA also has short-term loan guarantee programs. Ask your lender or call your local SBA office.

8. What if the lender declined me for a SBA Guaranteed loan?

SBA no longer has direct funds to lend and cannot provide financial assistance without a participating lender. Ask the lender what can be done to improve your business plan and application. Correct the business plan and resubmit it to the lender. If that lender is unwilling to approve the loan or submit the application to SBA, try another lender. The Small Business Development Centers (SBDC) and the Service Corp of Retired Executives (SCORE) can provide assistance. SCORE and SBDC are partly funded by SBA and one-on-one counseling is available.

9. How do I get a small business grant

At this time, Congress has not set aside any monies for grants to start and/or expand a small business. The U.S. Government does have grants that meet other purposes not related to business needs. The following website contains some of those resources:

10. What types of Businesses are Eligible for SBA Loan Programs?

The vast majority of businesses are eligible for financial assistance from the SBA. However, applicant businesses must operate for profit; be engaged in, or propose to do business in, the United States or its possessions; have reasonable owner equity to invest; and, use alternative financial resources first including personal assets. It should be noted that some businesses are ineligible for financial assistance. For more information, see:

Not sure how much Business you can afford, contact a Bank / Lender that Participates in the SBA Funding about getting pre-qualified for SBA financing. If you qualify, you will receive a pre-qualification letter stating what size business you are lender approved to buy and will save you the time and money!