SBA Loan Requirements Under SOP 50 10 8.1
13 CFR 120.100 lists five basic eligibility requirements for all applicants for SBA business loans, and Section A of SOP 50 10 8.1, effective 1 October 2026, adds core requirements for 7(a) and 504 loans alike; 10 percent down, 1.15 or 1.25 debt service coverage and a fully secured loan are rules of neither, and each is scoped by delivery method, loan size, age of the business or transaction type. The five: an operating business (Eligible Passive Companies excepted), organized for profit, located in the United States, small under 13 CFR part 121, and able to demonstrate a need for the desired credit. Coverage is 1.15 for a Standard 7(a) loan (greater than $350,000), 1.10:1 for a 7(a) Small loan not funding a change of ownership and 1.25:1 for three of the four change of ownership types.
This is general information, not legal or lending advice, and we are not a lender, a Certified Development Company (CDC), attorneys or environmental professionals. These are SOP minimums; lenders and CDCs also apply their own credit analysis under 13 CFR 120.150. SBA Information Notice 5000-882227 applies SOP 50 10 8.1 to applications received by SBA on or after 1 October 2026; the August notice, 5000-880695, said applications that "are issued an SBA loan number on or after that date". We do not resolve the difference: ask your lender or CDC which edition governs your file.
What are the SBA loan requirements?
They begin with 13 CFR 120.100, which Section A, Chapter 1 of the SOP cites for all applicants. Section A holds the core requirements for all 7(a) and 504 loans, Section B the 7(a) rules by delivery method and Section C the 504 rules.
| Requirement and detail page | The rule in one line | Where in SOP 50 10 8.1 |
|---|---|---|
| Eligible business | 7(a) and 504: the five requirements of 13 CFR 120.100; outside the seventeen ineligible categories of 13 CFR 120.110; all owners U.S. citizens or U.S. nationals with a U.S. principal residence | Section A, Ch. 1, Para. A to F |
| Equity injection | 7(a): at least 10 percent of total project costs for a Start-Up Business, by delivery method | Section B, Ch. 1, 2, 4 and 5 |
| Collateral | 7(a): not required at $50,000 or less on four delivery methods; a Standard 7(a) loan must be fully secured, with personal real estate equity taken on a shortfall; changes of ownership: Appendix 15 | Appendix 19; Appendix 15 |
| Personal guaranty | 7(a) and 504: an unlimited full guaranty from each individual who owns 20 percent or more | Section A, Ch. 5, Para. A |
| Debt service coverage | 1.15 Standard 7(a); 1.10:1 7(a) Small outside a change of ownership; 1.25:1 for three of four change of ownership types; 1.15:1 historical for 504 | Section B, Ch. 1 and 2; Appendix 15; Section C, Ch. 1 |
| Owner occupancy | 7(a) and 504: occupy at least 51 percent of an existing building, 60 percent of new construction | Section A, Ch. 3, Para. C |
| Environmental investigation | 7(a) and 504: of all commercial Property offered as security | Section A, Ch. 5, Para. E |
| Special purpose property | 504: a contribution of at least 15 percent instead of 10, or 20 instead of 15 for a New Business | Section C, Ch. 1, Para. E |
| Buying a business | 7(a) Initial Acquisition: 10 percent equity that cannot be reduced, 1.25:1 coverage, a business valuation | Appendix 15 |
| Franchise | 7(a) and 504: a brand that meets the FTC definition of a franchise must be on the SBA Franchise Directory | Section A, Ch. 1, Para. G |
| 504 project | 504: one job opportunity per $95,000 guaranteed by SBA, or a 13 CFR 120.862 goal | Section C, Ch. 1, Para. A |
| Fees | By program and fiscal year; the 7(a) upfront fee is charged on the guaranteed portion of the loan | Section A, Ch. 4, Para. C and E |
| Business plan or feasibility study | No general 7(a) business plan rule in the text we searched; SBA may request a 504 feasibility study | Section A, Ch. 4; Section B, Ch. 5; Section C, Ch. 1 |
How do SBA loan requirements change with loan size?
The line between a 7(a) Small loan and a Standard 7(a) loan is $350,000, and a change of ownership takes the Appendix 15 coverage floor at any size. Take a $300,000 loan over ten years, fully amortizing at 10.0 percent (an arithmetic input, not a rate quote), with no other business debt: monthly payment $3,964.52, annual debt service 12 x $3,964.52 = $47,574.24.
| How the $300,000 loan is classed | Floor | EBITDA required |
|---|---|---|
| 7(a) Small, not a change of ownership | 1.10:1 | $47,574.24 x 1.10 = $52,331.66 |
| Initial Acquisition under Appendix 15 | 1.25:1 | $47,574.24 x 1.25 = $59,467.80 |
The two rows are $59,467.80 less $52,331.66 = $7,136.14 of EBITDA a year apart.
Which businesses are not eligible for an SBA loan?
Those in the seventeen categories of 13 CFR 120.110. SOP Section A, Chapter 1, Paragraph F adds:
SBA financing is limited to business Applicants with 100% direct and/or indirect owners and SBA-required guarantors, all of whom must be U.S. Citizens or U.S. Nationals who have their Principal Residence in the United States, its territories, or possessions.
A green card holder among the owners makes the business ineligible unless that owner completely divests before SBA issues the loan number. GAO decided on 1 July 2026 (B-338157) that the notices introducing the rule are a rule under the Congressional Review Act; ask your lender and counsel. See SBA ineligible businesses.
How much equity injection does an SBA loan require?
At least 10 percent of total project costs for a start-up, a business generating revenue for 1 year or less, on a Standard 7(a) or 7(a) Small loan: "All 7(a) loans made to a Start-Up Business require a 10% equity injection based on the project cost" (Section B, Chapters 1 and 2; the CAPLines and International Trade credit standards print the same minimum). On the project, not the loan: $35,000 on a $350,000 project. SBA Express and Export Express leave it to the lender and a change of ownership follows Appendix 15; outside start-ups and changes of ownership we found no 7(a) percentage in the SOP. See SBA equity injection requirements, and the free SBA equity calculator for 504.
Does an SBA loan require collateral?
No, under Appendix 19, on 7(a) Small, SBA Express, Export Express or CAPLine loans of $50,000 or less. For Standard 7(a) loans it says "The loan must be fully secured"; on a shortfall the lender must take available equity in personal real estate, unless equity is less than 25 percent of fair market value. A 7(a) Small loan above $50,000 needs a first lien on the assets financed, with two exceptions, plus a lien on all fixed assets up to fully secured when 50 percent or more of the proceeds are working capital. A change of ownership has its own rules in Appendix 15, which applies its fully secured provisions on 7(a) Small and SBA Express loans too. See SBA collateral requirements.
Which owners have to personally guarantee an SBA loan?
Any individual who owns 20 percent or more of a 7(a) or 504 applicant must give an unlimited full guaranty. 13 CFR 120.160(a): "Holders of at least a 20 percent ownership interest generally must guarantee the loan." For applications received by SBA on or after 1 October 2026 the Trustor must guarantee whenever a trust must. SBA Form 148 (10/98) covers the whole Note: four 25 percent owners of a $1,500,000 loan each guarantee $1,500,000. See SBA personal guarantee requirements.
Which debt service coverage ratio applies to your SBA loan?
No single ratio applies: 1.15 for Standard 7(a), 1.10:1 for 7(a) Small outside a change of ownership, 1.25:1 for three of the four change of ownership types (1.15:1 for a Business Expansion), 1.15:1 historical for 504. Section B, Chapter 2, Paragraph C:
For 7(a) Small Loans, for purposes other than Changes of Ownership, the Applicant’s debt service coverage ratio must be equal to or greater than 1.10:1 on either a historical or projected basis.
No number is stated for SBA Express outside a change of ownership, and a 7(a) Small or SBA Express change of ownership must meet the Appendix 15 floor. A Standard 7(a) application based on projections must reach 1.15 within 2 years of loan funding or, for a construction project, of the end of construction. See SBA debt service coverage requirements.
How much of the building must an SBA borrower occupy?
Your business must occupy at least 51 percent of an existing building, or 60 percent of new construction, when 7(a) or 504 proceeds buy or improve real estate or refinance debt secured by it. 13 CFR 120.131(b), on an existing building: "the Borrower may permanently lease up to 49 percent of the Rentable Property if the Borrower permanently occupies and uses no less than 51 percent of the Rentable Property". See SBA occupancy requirements.
When does an SBA loan need a Phase I environmental assessment?
When a current or known prior use of commercial real estate offered as security matches Appendix 6, at any loan amount. Section A, Chapter 5, Paragraph E requires an Environmental Investigation of all commercial Property offered as security for a 7(a) or 504 loan (on our reading, including a building the loan is not buying), and the lender must compare the industry (NAICS) codes for "the Property’s current and known prior uses" with Appendix 6, except for a unit in a Multi-Unit Building. With no match, a loan up to and including $250,000 may begin with an Environmental Questionnaire; above that a Records Search with Risk Assessment is also required. Ask your lender; other triggers: SBA environmental requirements.
What is an SBA special purpose property?
A 504 classification that raises the borrower's minimum contribution to 15 percent of the project instead of 10, or 20 instead of 15 for a New Business, one in operation for 2 years or less when the loan is approved: on $1,000,000, $150,000 instead of $100,000, or $200,000 instead of $150,000. Section C, Chapter 1, Paragraph E lists 25 examples and calls the list "not intended to be all-inclusive". Appendix 15 attaches different rules to the term for 7(a) acquisitions. See the SBA special purpose property list.
What does the SBA require to buy a business?
Appendix 15 governs a 7(a) change of ownership. Initial Acquisition is the default type, and "For Initial Acquisitions, the required equity injection cannot be reduced or eliminated": 10 percent of total project cost, $165,000 on $1,650,000. A business valuation is required; Appendix 15 lets the lender perform it at a Business Purchase Price of $350,000 or less (a price, not a loan amount) unless buyer and seller have a close relationship. The 7(a) Small chapter and Notice 5000-882227 describe it as specific to 7(a) Small and SBA Express loans: on a Standard 7(a) loan, confirm it with your lender. Quality of Earnings and seller rules: SBA business acquisition loan requirements.
Does a franchise have to be on the SBA Franchise Directory?
Yes, if the brand meets the FTC definition of a franchise. Section A, Chapter 1, Paragraph G, for 7(a) and 504: "If the Applicant’s brand meets the FTC definition of a franchise, it must be on the Directory in order to obtain SBA financing." Before any 7(a) disbursement the lender must obtain the executed franchise agreement and every other document the franchisor requires you to sign; it need not keep the Franchise Disclosure Document. See SBA franchise loan requirements.
What does the SBA 504 program require?
One economic development objective and a contribution of at least 10, 15 or 20 percent. On the job route, "A Project must create or retain one job opportunity per $95,000 guaranteed by SBA" (Section C, Chapter 1, Paragraph A; $150,000 for a Small Manufacturer or an Energy Public Policy project). The other route is a 13 CFR 120.862 goal, with the job average tested on the CDC's whole portfolio. Under the SOP, generally a Third Party Lender provides 50 percent or more, the CDC debenture up to 40 and the borrower at least 10. See SBA 504 loan requirements.
What fees does an SBA loan carry in fiscal year 2027?
On 7(a) loans approved from 1 October 2026 to 30 September 2027, EWCP, WCP and veteran SBA Express loans aside, the upfront fee is 0 percent at $700,000 or less for manufacturers, listed food supply chain businesses and businesses located in a rural area (Notice 5000-881797). Other such loans over 12 months pay on the guaranteed portion: 2 percent at $150,000 or less, 3 percent from $150,001 to $700,000, and above that 3.5 percent of the first $1,000,000 guaranteed plus 3.75 percent of the rest. The SOP adds: "The 7(a) Lender is permitted to pass the cost of the Upfront Fee to the Borrower." 504 fees and waivers: SBA loan fees.
What are the alternatives to an SBA loan?
One is a USDA Business and Industry guaranteed loan (7 CFR part 5001), which needs a project in a rural area, with two exceptions, and an independent feasibility study on a loan greater than $1,000,000 to a new business: see USDA B&I loan requirements. Another is a conventional bank loan: the Interagency Guidelines Establishing Standards for Safety and Soundness (12 CFR 30 Appendix A) mention no business plan and set no debt service coverage ratio; see our bank loan guide.
Does the SBA require a business plan or a feasibility study?
Not as a general rule in the SOP text we searched. The words business plan appear six times: three describe packaging services (Section A, Chapter 4); three are in the export chapter, where certain International Trade applicants must submit an export business plan. Feasibility appears five times, all in the 504 credit standards, where SBA may request a study. For all business loans, 13 CFR 120.160(b) says: "SBA may require professional appraisals of the applicant's and principals' assets, a survey, or a feasibility study." See does the SBA require a business plan? and SBA feasibility study requirements.
What your plan has to show. Which rules apply, then each number on its rule's basis: sources and uses reconciled to total project cost, coverage at the applicable floor, owners to 100 percent with each guarantor, and the collateral.
Our SBA loan business plans are $1,000 Essential, $1,800 Standard and $2,500 Premium; financial models start at $750 and feasibility studies at $3,900, all fixed and published. We never charge a percentage of anything you borrow, invest or raise.
Business Plan Firm is the US practice of Avvale, a London consultancy. We have written 1,000+ plans for 500+ founders across 30+ countries, and our clients have raised $500M+.
How we verified this
Each rule is copied from the detail page linked beside it, which lists its sources, except four read directly on 11 October 2026: 13 CFR 120.100 and 120.160(b), CAPLines and International Trade equity, and the business plan and feasibility counts. Every quotation was re-checked against raw source text that day.
- SBA SOP 50 10 8.1, effective 1 October 2026: the current posting on SBA's SOP 50 10 page, which dates it 7 October 2026. The Section A search and the counts are ours.
- SBA Information Notices 5000-882227 (25 September 2026) and 5000-880695 (14 August 2026); 5000-881797 and 5000-881796 for fiscal year 2027 fees.
- 13 CFR 120.100, 120.110, 120.131, 120.150, 120.160 and 120.862: current Legal Information Institute text (linked), matching the 1 January 2025 annual edition at govinfo.gov (120.131, 120.160).
- GAO decision B-338157 (an Internet Archive capture), SBA Form 148 (10/98), 7 CFR 5001.105 and 5001.306 and 12 CFR 30 Appendix A.
Not verified or not summarized here: lenders' own credit score, down payment or years-in-business requirements (the Standard 7(a) and 7(a) Small credit standards set no minimum score or years in business); size standards; credit not available elsewhere; 504 collateral; Microloans and disaster loans.
Frequently asked questions
What are the requirements for an SBA 7(a) loan?
Under 13 CFR 120.100 and SOP 50 10 8.1, an SBA 7(a) loan needs a business that meets five basic eligibility requirements, owners who are all U.S. citizens or U.S. nationals, an unlimited full guaranty from each individual who owns 20 percent or more, and, outside a change of ownership, debt service coverage of 1.15 on a Standard 7(a) loan.
What do you need to qualify for an SBA loan as a start-up?
For a Standard 7(a) or 7(a) Small loan to a Start-Up Business, one generating revenue for 1 year or less, SOP 50 10 8.1 requires an equity injection of at least 10 percent of total project costs: $35,000 on a $350,000 project.
What is the minimum debt service coverage ratio for an SBA loan?
SOP 50 10 8.1 sets no single debt service coverage ratio for SBA loans. A Standard 7(a) loan needs 1.15, a 7(a) Small loan not funding a change of ownership 1.10:1, three of the four change of ownership types 1.25:1 and a 504 loan 1.15:1 historical.
Do small SBA loans need collateral?
Under Appendix 19 of SOP 50 10 8.1, outside a change of ownership, collateral is not required on 7(a) Small, SBA Express, Export Express or CAPLine loans of $50,000 or less. A 7(a) Small loan above $50,000 needs a first lien on the assets financed, with two exceptions.
Is there a minimum credit score for an SBA loan?
SOP 50 10 8.1 sets no minimum credit score and no minimum years in business in its Standard 7(a) or 7(a) Small credit standards. Lenders also apply their own credit analysis under 13 CFR 120.150, and their requirements are not summarized here.
This page summarizes SBA SOP 50 10 8.1 and the sources listed above as retrieved 5 to 11 October 2026. It is general information, not legal, lending or tax advice. Confirm current requirements with your lender or CDC before acting.