🏛️ SBA 7(a) Small Loan Program Limit to Be Reduced (Effective June 1, 2025)
The U.S. Small Business Administration (SBA) announced that starting June 1, 2025, the maximum loan amount for 7(a) Small Loans will be reduced back to $350,000.
Currently, the total loan limit for SBA 7(a) loans is up to $5,000,000, but since 2023, the threshold for Small Loans was raised to $500,000 to help small businesses gain easier access to capital. This was part of a modernization effort to improve SBA’s key working capital and fixed asset loan programs (like the 504 loan).
However, this increase will soon be reversed. According to SBA’s updated Standard Operating Procedures (SOP 50 10 8), the change is intended to better focus resources on truly small businesses and reduce lending risk.
👉 If you’re considering an SBA Small Loan, it is strongly recommended to apply and be approved before June 1, 2025 to take advantage of the current $500,000 cap.
🔑 Summary of Key Changes
Reduction in Maximum Loan Amount
→ The maximum loan for Small Loans will be reduced from $500,000 to $350,000.
Higher Business Credit Score Requirement
→ The minimum Business SBSS score will increase from 155 to 165.
Equity Requirement Introduced
→ Loans over $350,000 may require verification of borrower equity injection.
Stricter Ownership Requirements
→ The business must be 100% owned by U.S. citizens, nationals, or lawful permanent residents.
Reinstatement of Insurance Requirements
→ Hazard insurance and other types of coverage may be required for loan approval.
Mandatory Tax Transcript Verification
→ IRS tax return verification will be required for all loan applications.
Stricter Conditions When Seller Retains Ownership
→ If a seller retains any ownership, the deal must be a stock purchase, and the seller must provide a 2-year personal guarantee.
Construction Loan Requirements Tightened
→ Construction loans over $350,000 must comply fully with SBA construction protocols, including bonding or approved alternatives.
📌 Tips for Borrowers
✅ Apply Early
→ To qualify for the $500,000 limit, your application must be submitted and approved before June 1, 2025.
✅ Prepare Documents in Advance
→ Anticipate stricter underwriting and prepare ownership verification, tax documents, and insurance proof in advance.
✅ Get Pre-Approved for SBA Loans
→ Get free pre-approved with no credit damage and no obligation
Terry Kwon
Contact: (631) 624-4480