New SBA Guidelines in 2025: What Businesses Need to Know

In 2025, the Small Business Administration (SBA) announced sweeping changes to its lending programs, signaling a shift back to stricter eligibility and underwriting standards. These updates reverse several relaxed policies introduced in recent years, aiming to restore financial integrity and ensure that SBA-backed loans prioritize U.S. small businesses.

Among the most significant changes are the reinstatement of traditional underwriting requirements, new citizenship and ownership rules, and the relocation of certain SBA offices. For small business owners seeking financing, these policy shifts could impact both eligibility and the application process.

This article breaks down the new SBA guidelines for 2025, outlining what’s changed and what small businesses need to know to stay prepared.

Reinstatement of Traditional Underwriting Standards

In April 2025, the SBA officially eliminated the “Do What You Do” underwriting framework, a policy introduced in 2023 that allowed lenders to apply their own commercial credit standards to SBA-backed loans. This approach led to a surge in defaults and a $397 million deficit in the 7(a) loan program by FY2024.

To address these issues, the SBA introduced SOP 50 10 8, effective June 1, 2025, reinstating stricter underwriting criteria that were in place before January 2021. Key changes include:

• Restoration of the Franchise Directory: Streamlining procedures to help lenders determine business eligibility for SBA loans.​
• Increased Minimum SBSS Score: Raising the minimum acceptable Small Business Scoring Service (SBSS) score for 7(a) small loans from 155 to 165.​
• Mandatory 10% Cash Injection: Requiring a minimum 10% cash injection for startup business loans.​
• Reinstated Hazard Insurance Requirements: Mandating hazard insurance for all loans over $50,000.​
• Reinstated Life Insurance Requirements: Requiring life insurance for certain borrowers.​
• Reinstated Tax Transcript Verification: Requiring tax transcript verification for all loans.

Enhanced Citizenship and Ownership Requirements

Effective March 7, 2025, the SBA has implemented stricter citizenship and ownership requirements for its 7(a) and 504 loan programs. Under the new guidelines, businesses must be 100% owned by individuals who are U.S. citizens, U.S. nationals, or lawful permanent residents (LPRs) to qualify for SBA-backed financing.​

This change eliminates previous allowances for partial foreign ownership. Now, any ownership stake—regardless of size—by individuals who do not meet the specified citizenship criteria renders the business ineligible for SBA loans.

Ineligible ownership categories include:​

• Foreign nationals
• Visa holders
• Individuals granted asylum
• Refugees
• DACA recipients
• Undocumented immigrants 

To ensure compliance, lenders are now required to:​

• Document and input information on at least 81% of the business’s beneficial owners into the SBA’s E-Tran system.
• Certify that none of the beneficial owners are ineligible persons.
• Collect and verify alien registration numbers for any LPR owners.
• Obtain borrower certifications confirming that all owners meet the eligibility criteria.

These measures aim to align SBA lending practices with federal immigration policies and ensure that SBA-backed loans are directed toward businesses fully owned by individuals with the appropriate legal status.

Relocation of SBA Regional Offices

In March 2025, the U.S. Small Business Administration (SBA) announced plans to relocate six of its regional offices from cities identified as “sanctuary cities.” The affected offices are located in Atlanta, Boston, Chicago, Denver, New York City, and Seattle.

The SBA stated that these relocations aim to move offices to “less costly, more accessible locations that better serve the small business community and comply with federal immigration law” . The specific new locations for these offices have not been disclosed.

This decision aligns with the SBA’s broader policy changes in 2025, which include stricter underwriting standards and enhanced citizenship and ownership requirements for loan applicants. The agency emphasizes that these measures are intended to ensure that SBA resources are directed toward eligible American small businesses.​

For small business owners in the affected cities, the relocations may impact access to in-person SBA services. However, the SBA continues to offer support through its online platforms and nationwide network of district offices.​

Implementation of SOP 50 10 8

Effective June 1, 2025, the SBA will implement SOP 50 10 8, a comprehensive update to its Standard Operating Procedures governing the 7(a) and 504 loan programs. This new SOP replaces the previous version, SOP 50 10 7.1, and introduces several significant changes aimed at enhancing the integrity and effectiveness of SBA lending practices.​

• Reinstatement and Streamlining of the SBA Franchise Directory: The SBA has reinstated the Franchise Directory to assist lenders in determining the eligibility of franchised businesses for SBA loans. This move aims to provide clarity and consistency in evaluating franchise affiliations.​
• Clarification of Lender Responsibilities: The updated SOP emphasizes the role of lenders in assessing borrower eligibility, underwriting standards, and compliance with SBA requirements. Lenders are now explicitly responsible for ensuring that applicants meet all criteria for SBA loan programs.
• Elimination of the “Do What You Do” Underwriting Standard: SOP 50 10 8 removes the previous “Do What You Do” approach, which allowed lenders to apply their own credit standards to SBA loans. The new SOP mandates adherence to SBA-specific underwriting criteria to ensure uniformity and reduce risk.
• Enhanced Risk Mitigation Measures: The SOP introduces stricter requirements for verifying borrower information, including mandatory tax transcript verification and hazard insurance for loans over $50,000. These measures aim to mitigate risks and safeguard the SBA loan portfolio.​

These updates reflect the SBA’s commitment to reinforcing the integrity of its lending programs and ensuring that SBA-backed loans are extended to eligible and qualified small businesses.

Impact on Small Business Owners

The implementation of SOP 50 10 8 brings about several implications for small business owners seeking SBA financing. Understanding these changes is crucial for navigating the loan application process effectively.​

Potential Challenges:

• Stricter Eligibility Criteria: The reinstatement of the Franchise Directory and the elimination of the “Do What You Do” standard mean that businesses must now meet more defined eligibility requirements. This could pose challenges for businesses with complex ownership structures or those previously relying on more flexible underwriting standards.​
• Increased Documentation Requirements: With enhanced verification processes, applicants will need to provide comprehensive documentation, including tax transcripts, proof of hazard insurance, and detailed ownership information. This may extend the preparation time for loan applications.​

Recommendations:

• Consult with SBA-Approved Lenders or Advisors: Engaging with experienced SBA lenders or financial advisors can provide valuable guidance in understanding and meeting the new requirements. These professionals can assist in preparing the necessary documentation and navigating the application process.​
• Thoroughly Review Ownership Structures: Given the stricter eligibility criteria, it’s essential for business owners to assess their ownership structures to ensure compliance with SBA guidelines. This includes verifying that all owners meet the citizenship or residency requirements stipulated by the SBA.​
• Prepare Comprehensive Documentation: Gather all required documents in advance, including financial statements, tax returns, insurance policies, and ownership certifications. Having a complete and organized application package can expedite the loan approval process.

SBA Loan Solutions for Small Businesses Navigating 2025 Changes

With the SBA tightening its lending guidelines in 2025, securing financing can feel overwhelming. At SBG Funding, we specialize in helping small businesses like yours navigate these new SBA requirements—from stricter underwriting to updated ownership rules.

Why Choose SBG Funding for Your SBA Loan?

• Expert Guidance: Our SBA loan specialists stay up-to-date on every policy shift so you don’t have to.
• Streamlined Process: We help you prepare the right documentation to meet the new SOP 50 10 8 standards.
• Competitive Terms: Access SBA-backed financing designed to fuel your business growth.

How to Apply

1. Start Your Application: Fill out our apply form in minutes.
2. Get Personalized Support: Our team will guide you through the updated SBA process, step by step.
3. Secure Funding Faster: With our expertise, you can avoid delays and position your business for approval.

Don’t let policy changes stand between your business and the capital it needs.