{"id":9174,"date":"2025-06-10T11:23:41","date_gmt":"2025-06-10T11:23:41","guid":{"rendered":"https:\/\/listselfstorage.com\/us\/industry-insights\/?p=9174"},"modified":"2026-02-13T10:33:50","modified_gmt":"2026-02-13T10:33:50","slug":"sba-sop-rule-changes-for-sba-7a-program","status":"publish","type":"post","link":"https:\/\/listselfstorage.com\/us\/industry-insights\/sba-sop-rule-changes-for-sba-7a-program\/","title":{"rendered":"SBA SOP Rule Changes for SBA 7A Program"},"content":{"rendered":"<p><!-- VideographyWP Plugin Message: Automatic video embedding prevented by plugin options. --><br \/>\n<img loading=\"lazy\" class=\"alignnone wp-image-9176 size-full\" src=\"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-content\/uploads\/2025\/06\/Bank-Five-Nine-LinkedIn-Banner_Full-Color-Logo.png\" alt=\"\" width=\"1400\" height=\"425\" \/><\/p>\n<p><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">The SBA recently released their changes to their SOP rulebook that will go into effect <\/span><\/span><\/span><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">June 1, 2025. Below is a summary of impactful changes.<\/span><\/span><\/span><\/p>\n<ul>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Franchise Directory is returning. Franchises will be required to be listed in the directory. If a borrower operates under more than one franchise agreement, all franchises must be listed on the directory, not just the critical ones<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Need 100% ownership, including indirect ownership of the business, to include SSN, address, % owned, and DOB.\u00a0 All must be citizens or LPRs and primarily reside in the United States. There is a six-month lookback prior to the date of issuance of an SBA loan number.\u00a0 The only exception to allow a loan request to move forward would be if the ineligible person fully divests their ownership so as to sever any relationship, including being an employee of the business.<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Credit elsewhere test returns to examine the resources of 20% or more owners and the resources of the Applicant<\/span><\/span><\/span>\n<ul>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">This will again require a spouse to sign the PFS<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Small loan size returns to $350,000 or less<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Loans more than $50,000 require hazard insurance on all assets pledged as collateral. If hazard insurance is not available, the loan can\u2019t be approved<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Debt Service Coverage must demonstrate 1.15x coverage within 2 years from the loan funding or within 2 years from the end of construction<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Cash flow projections may not include anticipated cash flow from rental income from the project property, but it is ok to include the rental income in the global analysis<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Start-up businesses (generating revenue for 12 months or less) will require a 10% equity injection based on the total project costs<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Complete Change of Ownership will continue to require a 10% equity injection. Seller debt can only be considered as equity if it is on standby for the life of the loan and does not exceed half of the SBA-required equity injection amount.\u00a0 Note it may accrue interest and may be added to the standby debt to be amortized after the 7a loan is paid in full<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Factor agreements and merchant cash advances can\u2019t be refinanced<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">The six-month lookback period returns for individuals who decrease their ownership interest within 6 months of applying for an SBA loan.\u00a0 For anyone who was 20% or more and decreased to below 20% within 6 months of approval of an SBA loan, they would be subject to providing a guaranty and the collateralization requirements<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">For a change of ownership that is purchasing a division of a business, the SBA will allow third party CPA prepared or reviewed financial statements in lieu of tax transcripts as a means to verify the revenues of the selling division of the business<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Environmental investigations are required on all commercial real estate properties pledged as collateral<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">When refinancing existing debt, the SBA loan must be secured with at least the same collateral and lien priority as the debt that is being refinanced<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">OFAC must be run on the business applicant and all owners. This will require Dl information on 100% ownership<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">We cannot permit a C-PACE loan to be made on a property that has an SBA loan<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Investor equity is considered equity provided the equity investment not subject to an agreement to repay equity or make distributions to recover an investor\u2019s investment prior to release of the guaranty. Note: Whether called \u201csearch funding\u201d or by some other name, SBA will consider any investment subject to an agreement to repay equity or make distributions to recover an investor\u2019s investment prior to release of the guaranty (e.g., certain types of redeemable preferred stock) to be debt and not equity<\/span><\/span><\/span><\/li>\n<li><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">The purchase of excess land (land that is not for immediate use as part of the project) is not eligible to be funded by SBA loan proceeds<\/span><\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\"><i><u>Contact<\/u><\/i>:<\/span><\/span><\/span><\/p>\n<p><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\"><b>Nick Collins<\/b>, Commercial Lender \u2013 Vice President<br \/>\n<\/span><\/span><\/span><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">Bank Five Nine<br \/>\n<\/span><\/span><\/span><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">155 W. Wisconsin Avenue, Oconomowoc, WI &#8211; 53066<br \/>\n<\/span><\/span><\/span><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">P: (262) 560-2016<br \/>\n<\/span><\/span><\/span><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">C: (262) 468-6169<br \/>\n<\/span><\/span><\/span><span style=\"color: #222222;\"><span style=\"font-family: Lato, Helvetica Neue, Arial, Helvetica, sans-serif;\"><span style=\"font-size: medium;\">F: (262) 804-9926<\/span><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The SBA recently released their changes to their SOP rulebook that will go into effect June 1, 2025. Below is a summary of impactful changes. Franchise Directory is returning. Franchises will be required to be listed in the directory. If a borrower operates under more than one franchise agreement, all franchises must be listed on the directory, not just the critical ones Need 100% ownership, including indirect ownership of the business, to include SSN, address, % owned, and DOB.\u00a0 All must be citizens or LPRs and primarily reside in the&hellip;<\/p>\n","protected":false},"author":13,"featured_media":9175,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[21],"tags":[],"gutentor_comment":0,"_links":{"self":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts\/9174"}],"collection":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/comments?post=9174"}],"version-history":[{"count":1,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts\/9174\/revisions"}],"predecessor-version":[{"id":9177,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/posts\/9174\/revisions\/9177"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/media\/9175"}],"wp:attachment":[{"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/media?parent=9174"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/categories?post=9174"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/listselfstorage.com\/us\/industry-insights\/wp-json\/wp\/v2\/tags?post=9174"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}