Another update to SBA’s rulebook just landed — a new SOP (50 10 8.1) took effect on October 1, 2026 and touches several parts of how 7(a) loans get made. Our team stays closely on top of SBA changes so you, as our partner, don’t have to, but this SOP changes enough that we wanted to walk you through key areas, so you know what to expect as we work together.
The biggest shift is in how change of ownership transactions are handled. Buying, selling, or restructuring ownership now comes with a stricter set of rules than before. That’s where we’ll start, followed by a few smaller changes to know about.
7(a) loans used for business acquisition see the biggest changes
For the first time, SBA gave change-of-ownership loans their own dedicated section of the SOP, and that separation comes with significant changes. First, regardless of loan size, these loans can no longer be processed under SBA’s streamlined guidelines for smaller 7(a) loans. Every change-of-ownership loan must now go through full underwriting.
SBA also sorted business acquisitions into four categories, each with its own set of requirements:
Initial acquisition (someone buying a business for the first time):
- Requires a 10% equity injection that can’t be reduced or waived.
- A 1.25x debt service coverage ratio based on historical earnings is now required, versus the previous 1.15x requirement.
- The seller must fully exit the business but may continue to provide consulting support under a consulting agreement for up to 24 months.
Business expansion (an existing business buying another business in the same industry):
- The 10% equity requirement can be reduced or eliminated if the buyer has enough liquidity.
- Debt service coverage stays the same as guidelines under the previous guidelines at 1.15x.
- Ownership may be restructured as part of the transaction, but the number of individuals providing full personal guarantees cannot be reduced.
Owner buyout (an existing owner buying out a partner, in full or in part):
- As with business expansion, the 10% equity requirement can be reduced or eliminated if the buyer has enough liquidity.
- Debt service coverage is now higher here, at 1.25x.
- Even if the seller keeps a stake under 20% after the sale, they now have to personally guarantee the loan for two years after the loan is fully disbursed.
Employee or cooperative ownership (ESOP, or employee stock ownership plan, and co-op deals):
- These loans are exempt from the equity injection entirely when the plan acquires at least 51% control
- The 1.25x debt service coverage floor now applies here.
While we’ll coach you and your client through the specific requirements for each business acquisition type, knowing which category a deal falls into early helps you set your client’s expectations about equity and cash flow from the first conversation.
A few requirements now apply to business acquisition loans across the board
On top of the category-specific rules above, several requirements now apply to every business acquisition loan.
- An independent business valuation is now required for all business acquisition loans.
- A Quality of Earnings report is required on deals with a purchase price of $3 million or more. It’s an outside financial review that checks the business’s earnings against its bank statements and tax returns.
- The debt service coverage floors discussed above can only be measured against historical earnings, rather than projections.
- Every business acquisition loan must be fully secured by all available collateral.
- Site visits are required unless the business being acquired has no physical storefront or customer-facing space.
- Sellers who stay on to help with the transition can now do so for up to 24 months, double the old 12-month limit.
Other updates to make note of
Some updates outside of business acquisition loans may come up with your clients as well. SBA will now check a franchise brand’s legal and compliance history before approving a loan tied to that brand. New guidance also spells out which businesses that rent out space, like salon suites and ghost kitchens, qualify for financing and which don’t. Finally, hazard insurance requirements eased slightly for loans of $500,000 or less in certain situations.
The bottom line: 7(a) loans used to acquire a business will have longer timelines going forward
Taken together, these changes mean business acquisition loans will take longer to close under these new guidelines, with buyers needing to assemble more documentation up front and valuations and Quality of Earnings reports required. Messaging this to your clients now, rather than after a loan is already moving, lets them plan around it.
These new rules apply based on when a loan receives its SBA loan number, not when the loan was negotiated or submitted. If one of the referrals you sent is already in motion, reach out and we’ll tell you where it stands.
If you have a referral to chat through that involves a change of ownership, reach out to your Grow America contact. We’ll walk through what the new rules mean for clients and their timeline.