New SOP

SOP Changes

On April 22, 2025, the SBA released a notice announcing the publication of the new Standard Operating Procedure (SOP) 50-10-8. This updated SOP will go into effect on June 1, 2025. In the meantime, SOP 50-10-7.1 will remain in effect for all loan applications that receive an SBA loan number through May 31, 2025.

Highlighted below are some of the key changes included in the new SOP. However, please note that this is not an exhaustive list—several additional updates are detailed in the full SOP.

As we prepare for this transition, NWBDA is committed to ensuring a smooth implementation of the updated requirements. To that end, we will make every effort to adopt these changes with minimal disruption. If you have any questions or need further clarification, please contact one of our Business Development Officers.

Ownership/Guarantor Changes:

• All applicant business owners must now be U.S. Citizens, Naturalized Citizens, U.S. Nationals, or Lawful Permanent Residents. This updates the previous requirement, which applied to only 51% ownership.

• The SBA has reinstated prior guidance on the credit elsewhere requirement. CDCs and SBA Lenders must now include a determination in their credit memos confirming that some or all of the requested loan amount is not available from the Applicant or any owner holding 20% or more equity.

• The SBA also brought back the 6-month lookback requirement for personal guarantees.

• Additionally, the agency eliminated the waiver of Personal Financial Statements (PFS) for supplemental guarantors. As a result, all guarantors must now provide a PFS.

Franchise Changes:

• The SBA reinstated franchise-related guidance, including the return of the SBA Franchise Directory.

Passive Business Changes:

• The SBA reintroduced detailed guidance on ineligible business models. This includes clarification around passive businesses—such as ghost kitchens, office suites, and salons—as well as businesses involved in gambling, marijuana or hemp, or with previous federal loan defaults or delinquencies.

Other Secured Debt:

• Borrowers must now show that any “Other Secured Debt” has been current for at least 12 months, up from the previous 6-month requirement.

Insurance

• The SBA removed the previous waiver for hazard insurance on loans of $500,000 or less. Instead, lenders must now follow prior guidance that requires hazard insurance for all loans of $50,000 or more.

Veteran Businesses:

• The SBA will give processing priority to loan applications submitted by veteran-owned businesses.

Energy Public Policy Goal:

• The SBA reinstated a $16.5 million cap on outstanding gross debentures for 504 projects that qualify under the Energy Public Policy goal.

Environmental:

• Environmental Reports must now be dated within one year of the SBA loan approval date.

Appraisal:

• The SBA clarified that borrowers must submit an appraisal at the time of application for any project involving a business acquisition or a non-arm’s-length change of ownership.

• For non-arm’s-length transactions, the SBA reaffirmed that the purchase price must not exceed the lesser of the as-is appraised value or the purchase price of the 504-eligible fixed assets.