New SBA Loan Rules Start October 1 for Business Buyers

New SBA rules start October 1, 2026. SOP 50 10 8.1 covers SBA 7(a) and 504 applications the SBA receives on or after that date. It rewrites the rules for buying a business.

That matters if you are buying a company in South Florida with an SBA 7(a) loan, buying out a partner, or selling to a buyer who is. The rules set the cash flow test, the paperwork, the loan term and how long the seller can stay.

The U.S. Small Business Administration (SBA) announced its new Standard Operating Procedure (SOP) in Information Notice 5000-880695, published August 14. On September 25, Information Notice 5000-882227 replaced that text with a version carrying technical policy updates. This article reads the September text against SOP 50 10 8.0, the version it replaces.

When the new SBA rules apply to your loan

The SBA's September 25 notice says the updated SOP "will apply to all applications received by SBA on or after" October 1, 2026. Lenders "must continue to use SOP 50 10 8 for 7(a) and 504 applications submitted through September 30, 2026."

The August notice tied the cutoff to the date an application is "issued an SBA loan number." The SOP links the two. In its interest rate rules, the date a complete application "is received by SBA" is the date it is approved and assigned a loan number.

If your lender submitted your file by September 30, ask it to confirm in writing which version applies. The SBA is still updating its application forms, so lenders collect the required certifications in the loan file. The rules are federal, so a buyer in Doral follows the same appendix as a buyer in Ohio.

The four types of SBA acquisition loans under Appendix 15

Appendix 15 sorts every change of ownership into four types. Initial Acquisition is the default, and the lender must document why a deal fits any other type.

One rule catches partner buyouts. In a buyout, anyone employed by the business for less than 24 months may buy less than 50 percent and cannot become the largest shareholder. Otherwise, the deal is underwritten to Initial Acquisition standards.

Debt service coverage for SBA acquisition loans

Debt service coverage (DSC) compares what the business earns with what it must pay on all its debt after the sale. Appendix 15 defines it as EBITDA divided by the combined debt service after the transaction. EBITDA is earnings before interest, taxes, depreciation and amortization.

The test uses the last fiscal year or the average of the last two, on a historical or adjusted basis. Prudent adjustments for items such as non-recurring income, seller discretionary expenses and owner pay are allowed. The lender must justify each one in its credit memorandum.

Projections no longer carry the deal. The lender must evaluate the buyer's projections but "may not rely on them to meet the DSC requirement," according to the SOP. SOP 50 10 8.0 let a change of ownership rest on projections reaching 1.15x within two years.

The exception is an owner-occupied special purpose property, such as a hotel or storage facility, when the real estate fully secures the loan. 7(a) loans that do not fund a change of ownership keep the 1.15x floor.

As an illustration only: $500,000 of EBITDA supports about $400,000 a year of total debt payments at 1.25x. At 1.15x, it supported about $434,800.

The lender works from three years of year-end financials at the highest level available. The SOP ranks them: audited, reviewed, CPA compiled, then tax returns. Tax returns must match IRS transcripts. Clean accounting and bookkeeping on the seller's side shortens that review.

When a quality of earnings report is required

A quality of earnings report, or QoE, tests whether a seller's reported profit is real and likely to last. SOP 50 10 8.1 requires one for Initial Acquisitions and Business Expansions with a Business Purchase Price of $3 million or more. SOP 50 10 8.0 did not mention one.

The Business Purchase Price leaves out owner-occupied commercial real estate. The $3 million test applies before buyer equity, seller notes or any other financing.

An independent financial professional prepares the QoE for the lender. It may not be prepared by or for the seller. It must include a cash proof. That rebuilds cash in and out from bank statements for the trailing 12 months and the last two fiscal years.

The lender must use the QoE's earnings in the coverage test. If the result does not support the valuation and the debt, the loan must be reduced. The cost can be passed to the buyer and can count toward the equity injection. The September notice adds that a QoE already prepared for the buyer may be used with a reliance letter or a second review by a different firm.

Lenders in the SBA's Preferred Lender Program (PLP) may finish the valuation and QoE after the loan number issues. Both must already be engaged, with an engagement letter in place, when it does. Our guide to due diligence when buying a small business covers the rest of the review.

Loan terms, equity and seller notes under the new SBA rules

Ten years for the business. A 7(a) loan that funds a change of ownership may not amortize over more than 10 years. Only the real estate share of a blended loan may run up to 25 years. SOP 50 10 8.0 allowed a maturity of up to 25 years whenever real estate was 51 percent or more of proceeds. That option is gone for acquisitions, except special purpose property at 85 percent or more of project costs.

Ten percent down for a new buyer. An Initial Acquisition needs equity of at least 10 percent of total project cost, with no reduction. For Business Expansions and Owner Buyouts, the lender may reduce or waive it. The business needs enough liquidity and no negative net worth at its last fiscal year-end.

Seller notes. A seller note on full standby, with no principal or interest paid for the life of the 7(a) loan, can count as equity. Sources like that can cover no more than half of the required injection. A seller note can be refinanced only after 36 months in place and current, up from 24.

Total debt capped at value. All purchase debt, including seller debt not on full standby, is limited to the business valuation. Any price above the valuation must come from equity.

The seller's exit. In an Initial Acquisition or Business Expansion, the seller may not stay as an owner, officer or employee. The business may hire the seller as a consultant for up to 24 months in total, up from 12. Seller earnouts remain prohibited.

SBA Express and same-bank refinancing

The August notice also cites "new flexibilities for SBA Express and same institution debt refinancing." A lender can now issue a new SBA Express loan to refinance a current one before amortizing payments begin. The new loan can restart the revolving period or term the balance out over up to 10 years.

Same institution debt is a loan the lender already holds. SOP 50 10 8.0 barred refinancing it under a lender's delegated PLP authority. SOP 50 10 8.1 allows that for non-SBA debt.

What business buyers in South Florida can do now

For the basics of each program, see our SBA loan guide for small business. Our business funding team can help package the file.

Questions about SOP 50 10 8.1