SBA 7a rule changes are common and typically happen every year or so. That said, these last 2 years there have been a whirlwind of changes. Everything from partial ownership buyouts to EIDL loans has complicated the main street lending market and many broker transactions.  Interpreting each of these changes has become a full-time job for many lenders and providers.  Implementing the wrong interpretation would put a lender’s SBA guarantee at risk, and nobody wants that. For that reason alone, many lenders have shied away from considering these changes prior to SBA’s specific clarifications. These details usually come within a few months of the newest rule publications. The timeframe prior allows for lender feedback and input from “the real world” and can help adjust or clarify the specifics moving forward.

Recognizing that the above feedback and clarification provided by SBA can adjust any rule in place today, I’ve spoken to a high number of lenders and have compiled this broker cheat sheet as a summary of the main changes affecting main street. I hope you find this useful and will share with all your associates. This “Broker Cheat Sheet” is also currently available to the public on our EasySBA.com website home page.

General SBA Updates:

• New SOP 50 10 8 – June 1^st Start
• Volume up 41% this year for SBA, manufacturing loans are up 70%
• SBA Max increased to $10MM for manufacturing
• SBA Franchise Directory is coming back June 1^st, 2025!

SBA Acquisition Updates:

• Equity Injection:
  • Seller debt may not be considered as part of the equity injection unless it is on full standby for the life of the SBA loan and does not exceed half of the required equity injection
• Maximum SBA 7a Small Loan Program amount goes back to $350M, not $500M anymore
• Partial Ownership – Sellers staying on owning less than 20% must guarantee the full loan amount for a period of 2 years
• It is not required to place a lien on vehicles unless the value is greater than $10,000
• Life insurance required for collateral shortfall on loans above $350M
• 10% equity requirement for all start up and ownership changes

General Acquisition Changes:

• Multi step partial changes of ownership are not eligible (need to complete partial change of ownership, and then ask SBA for permission) (requires stock sale vs asset sale)
• 6-month lookback on associates to verify they are not an ineligible person (can’t be an employee, owner, or associate)
• Illegal aliens cannot be limited guarantors or any employee of the business
• 6-month look back rule on collateral, can’t quit claim deed property or other scenarios to avoid pledging collateral

Please “Like”, share, and support us as you see our posts and social media. Diamond Financial needs transactions to continue to support our industry and provide valuable main street broker information.

You can reach out directly to me at Stevem@easysba.com or my direct dial at 919.376.2922.

I hope today’s letter was informative and please feel free to share with anyone that you believe can benefit from it. We’re dedicated to the success of the intermediary.

Steve Mariani

Owner, Diamond Financial Services

(888) 238-0952

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