SBA Reinstates Stronger Underwriting Requirements for 7(a) Loans

Posted: Apr 30 2025

The Small Business Administration has reinstated stronger underwriting requirements for 7(a) loans through the issuance of a Standard Operating Procedure document.

The 7(a) program is a loan guarantee program designed to encourage lenders to provide loans to small businesses that might not otherwise have access to financing. Under the previous administration, SBA loosened underwriting requirements through a 2023 final rule that many have attributed to the recent rise in default rates for 7(a) loans.

The SOP also reinstated the franchise directory — a resource that assisted 7(a) lenders with determining the eligibility of a franchisee for a 7(a) loan before it was discontinued in 2023. In addition, the SOP restored a requirement that small business borrowers provide a 10% equity injection when the borrower is a startup or when the borrower is purchasing an existing business.

To read more, visit: https://colemanreport.com/wp-content/uploads/2025/04/SOP-50-10-8-effective-6.1.2025-Final.pdf