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Understanding the SBA SOP 50 10 8 Changes for Your Small Business Loan
Are you a small business owner or franchisee looking to fund your venture with an SBA loan? The new SBA Standard Operating Procedure effective June 1, 2025, introduces critical updates to the rules governing 7(a) loans, affecting eligibility, underwriting, and application processes. Let’s break down the key changes and show how LoanBox’s platform helps you navigate them to secure funding efficiently.
Stricter Guarantor Requirements for SBA Loans
When financing your small business or franchise, whether for international trade or other ventures, a guarantor provides a safety net for lenders by personally or corporately backing the loan’s repayment. This commitment strengthens your loan application, especially for SBA-backed financing.
Navigating SBA Franchise Loan Eligibility in 2025
Are you a franchisee dreaming of launching or expanding your franchise with an SBA loan? The SBA’s updated rules, effective June 1, 2025, under SOP 50 10 8, introduce significant changes to franchise loan eligibility, reinstating the Franchise Directory, tightening ownership requirements, and enforcing stricter compliance standards. Let’s explore how the new rules affect your SBA loan eligibility.
No More Refinancing Merchant Loans With SBA Loans
Are you a small business owner or franchisee struggling with the crushing payments of a merchant cash advance (MCA)? You might be eyeing an SBA loan to refinance that high-cost debt and stabilize your finances. Unfortunately, the SBA’s rules, updated in SOP 50 10 8 (effective June 1, 2025), explicitly prohibit refinancing MCAs with SBA 7(a) or 504 loans. This restriction protects businesses from predatory debt cycles but ironically now prohibits SBA loans to help refinance out of predatory type lending.
Mastering the SBA Credit Elsewhere Test in 2025 with LoanBox
Are you a small business owner or franchisee aiming to fund your venture with an SBA loan? Whether you’re launching a new franchise or expanding a local retail shop, the Credit Elsewhere Test is a critical hurdle to secure SBA financing. This test ensures you genuinely need the SBA’s low-rate, long-term loans because you can’t obtain affordable financing elsewhere. The updated SBA SOP 50 10 8, effective June 1, 2025, makes this test more rigorous, demanding robust documentation and stricter underwriting.
Non-U.S. Citizens Ineligible for SBA Loans in 2025
The SBA’s updated SOP 50 10 8, Section B, Chapter 1, Paragraph B, introduces a strict ownership requirement, barring non-U.S. citizens from accessing 7(a) and 504 loans unless the business meets specific criteria. Here’s the breakdown:
New SBA Equity Injection Rules
As of June 1, 2025, SBA loans for startups and changes of ownership will require a minimum 10% equity injection of total project costs. While the SBA made significant changes it allows for exceptions for business expansion.
Top 10 Banks for Franchise Loans Over the Last 10 Years
Over the past decade, an average of 33% of the top 10 SBA franchise lenders change each year, based on total funded loan amounts. This means that, on average, one-third of the top lenders from one year are replaced by new entrants the next. Here are specific examples over the last few years:
Business Loan Credit Scores: What to Know in 2025
When it comes to securing financing for your business, your credit score plays a pivotal role. Whether you’re eyeing a traditional business loan or an SBA-backed loan, understanding where you stand credit-wise can make or break your application.
Most Business Borrowers Initially Contact Low Probability Lenders
Small business owners often start their SBA loan journey by reaching out to the lender least likely to approve their application. It’s a systemic issue nationwide: selecting the right SBA lender is a challenge many entrepreneurs don’t even realize they’re facing.
Are You Too Big for an SBA Loan? Not Likely.
The SBA loan program is a popular option for small businesses seeking funding for growth and expansion. But there is a catch: your business must meet size requirements to qualify. We’ll explain the SBA's size standards and how they apply to you.
SBA Lending to Existing Businesses > 2 Years Old
Existing businesses over 2 years old is by far the biggest recipient of SBA loans in general but the smallest recipient when it comes to franchise lending. Established business loans have accounted for 42% to 49% of funded SBA loans over the last few years. In FY2024, 45% of funded SBA 7(a) loans went to established businesses while only 15% of SBA lending went to established franchise businesses over 2 years old.
FY 2024 SBA Lending Statistics
5,655 banks all-time funded an SBA 7(a) loan, 2,896 over the last decade, and 1,277 banks funded an SBA loan over the last 12 months.
Top Franchise Brands for SBA Startup Loans in 2024
Franchise startups can be perceived as more preferable and less risky to some lenders, especially those specializing in franchise lending. For non-franchise small business startup SBA loans and business loans in general, the borrower needs to have a background and some expertise in the kind of business they are wanting to startup. This requirement is met with a franchise loan since you are buying this experience and blue print.
Ideal Business Buyer Traits Sellers Should Prioritize
Selling a business is a significant decision, and selecting the right buyer is critical to ensuring a smooth transition, protecting your business legacy, and maximizing your return. Below are the key traits and characteristics every small business owner should evaluate when considering potential buyers:
Out-of-State Banks Dominate SBA Lending
72% of funded SBA 7(a) loans over the last year (FY 2024) were funded by out of state lenders. Out of state lenders were responsible for even a higher percentage of franchise lending with 81% funded franchise SBA loans.
Top Franchise Brands in SBA Lending
In FY2024 there were 5,572 franchise loan approvals and 3,680 were funded for a total of $2.7 billion and an average loan amount of $722,652. There were 1,115 different franchise brands with borrowers having an SBA 7(a) funded loan. This article highlights the top franchise brands in SBA lending.
Change of Ownership Loans in 2024
Change of ownership is a business age category tracked by the SBA. The SBA has specific and different rules for each type of loan where ownership changes hands. During FY 2024 there were 627 banks funding 4,151 change of ownership loans for $4.8 billion with an average loan amount of $1,158,934.
SBA Lending to New Businesses Under 2 Years Old
Securing a loan as a new business can be particularly challenging. Traditional lenders often hesitate to finance young companies with limited operating history and unproven revenue streams. These lenders prioritize established businesses with a track record of success and a demonstrable ability to repay debt.
Are Local Banks Good for SBA loans?
When a small business owner thinks they want to apply with their current or a local bank it is primarily based on prioritizing familiarity. “I’m familiar with this specific bank because I drive by it on the way to the office”. Or, “the local branch I bank at is familiar with me so I have the best chance of my loan getting approved with them”.