What the New SBA SOP 50 10 8 Means for Your Small Business Loan in 2025

If you’re eyeing an SBA loan to grow your business or franchise, you’ve probably heard the buzz about the new SBA Standard Operating Procedure (SOP 50 10 8), effective June 1, 2025. But what does it actually mean for you? These changes shake up how SBA loans work, and they could affect your application, eligibility, or loan terms. Don’t worry—LoanBox is here to break it down in plain English and help you navigate the new rules like a pro.

What You Need to Know
The SBA’s SOP 50 10 8 is the rulebook lenders follow for 7(a) and 504 loans, and the 2025 update brings some big shifts. Here’s what you need to know:

Stricter Underwriting Standards
The SBA has ditched the vague “Do What You Do” underwriting approach. Now, lenders must use specific credit score models and dig deeper into your financials. For loans under $500,000, the FICO Small Business Scoring Service (SBSS) score minimum is 155, but it could climb higher depending on the lender. For bigger loans, expect a personal FICO score of at least 650, with some lenders wanting 680 or more. This means your credit history, cash flow, and debt-to-income ratio will face more scrutiny.

Franchise Directory Is Back
Great news for franchisees! The SBA Franchise Directory is reinstated, listing pre-approved franchise brands. If your franchise is on the list, your loan process could be smoother and faster. But if it’s not, you’ll need extra documentation to prove eligibility, which can slow things down.

New Ownership and Citizenship Rules
The SBA now requires at least one U.S. citizen or lawful permanent resident to own 51% or more of the business. Non-U.S. citizens are out of luck for SBA loans, a big change from previous rules. Plus, all owners with 20% or more equity must provide a personal guaranty, and lenders will verify your business’s ownership structure more closely.

Tougher Credit Elsewhere Test
The “credit elsewhere” test is stricter. You’ll need to prove you can’t get financing elsewhere on reasonable terms, with lenders documenting why conventional loans won’t work. This could mean more paperwork, especially if you’re a startup or have a complex financial situation.

Other Key Changes:

Equity Injections for Startups: Most startups now need a 10% cash injection, though some lenders may still require up to 20%.

Ineligible Businesses: The list of businesses that can’t get SBA loans (like gambling or speculative real estate) is clearer, so check your industry.

Insurance Requirements: For loans over $500,000, life insurance is mandatory if the business relies on one key person, and collateral rules are tighter.

These changes aim to reduce risk for lenders but can make getting an SBA loan trickier.