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1 1 (April 28, 2025)

handle is hein.crs/cstsmlbsant0001 and id is 1 raw text is: Congressional ~.Research Service ~~~ ~~informing the legislative debate since 1914____________________ Changes to Small Business Administration (SBA) Business Loan Program Policies in Early 2025 April 28, 2025 On April 22, 2025, the Small Business Administration (SBA) announced changes to policies and procedures for its two largest small business loan programs, the 7(a) and 504 loan guarantee programs. The SBA released a new version of the loan origination standard operating procedures for those programs (SOP 50 10 8). The new SOP changes loan eligibility criteria, underwriting standards, and procedures, and becomes effective on June 1, 2025. This Insight reviews those changes, which generally limit eligibility in certain cases, tighten underwriting standards, and put more responsibility on participating lenders. Loan Eligibility The new SOP implements previously announced loan eligibility changes related to citizenship and immigration status (SOP pp. 27-31). SBA loans will be restricted to small businesses with 100% of direct and indirect owners, loan guarantors, and key employees (such as top-level managers) who are U.S. citizens, U.S. nationals, or lawful permanent residents (LPRs). None of these individuals may be an ineligible person: a foreign national, refugee, asylee, conditional LPR, visa holder (such as a work or student visa), Deferred Action for Childhood Arrival (DACA) participant, or an undocumented immigrant. Lenders must verify the documents and status of LPRs with immigration officials. Given a new six-month lookback requirement, no ineligible person may have been an owner or key employee six months prior to the loan application unless that person has permanently severed ties with the business. Additionally, while most ineligible persons may be regular (not key) employees of the business, a business that receives an SBA loan may not employ undocumented immigrants. This is a change from the previous long-standing policy in the programs, which allowed assistance to any business 51% or more owned by U.S. citizens, U.S. nationals, and LPRs. The new SOP also tightens the no credit elsewhere requirement (pp. 38-39). By statute, the 7(a) program may not provide assistance if the applicant can obtain credit elsewhere (15 U.S.C. §636(a)(1)(A)(i)). Under previous procedures, lenders did not consider the personal resources of the Congressional Research Service https://crsreports.congress.gov IN12549 CRS INSIGHT Prepared for Members and Committees of Congress