As interest in buying, funding, or expanding a business continues to surge, the SBA has introduced several key updates to its Standard Operating Procedure (SOP 50 10) that could reshape how small business owners and buyers access capital for the rest of 2025. Whether you’re a first-time buyer, a broker, or a seasoned entrepreneur, understanding these shifts is critical to navigating SBA financing successfully, moving forward.

Below are the most important changes you need to know — and how they may affect your financing strategy:

Stricter Rules on Equity for Business Acquisitions

Borrowers are still required to inject a minimum of 10% equity in business purchase deals. If part of that injection comes from a seller note, it now must be on full standby for the entire life of the loan to count as equity. Additionally, seller financing can make up no more than 50% of the required equity injection.

What it means for you: If you’re relying on seller financing to meet the injection requirement, your structure must be airtight. Expect increased documentation and less wiggle room in how you source or split the required equity.

 

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MCA and Factoring Refinancing Is Now Prohibited

The SBA has reinforced that Merchant Cash Advances (MCAs) and factoring agreements are not eligible for refinancing under the 7(a) loan program.

What it means for you: If you’re burdened by high-cost debt like MCAs, SBA financing won’t be a lifeline to clean it up. You’ll need to explore alternative strategies or restructure the deal before approaching SBA lenders.

 

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Small Loan Cap – aka SBA Express – Expected to Drop to $350,000 (June 1, 2025)

The SBA is expected to reduce the maximum size of what it defines as a “Small Loan” from $500,000 to $350,000, starting June 1, 2025. Lenders with delegated authority (PLP lenders) will be required to process these loans under their PLP authority, with fewer exceptions.

What it means for you: If you’re planning to borrow under $500K, you should act quickly. After June, lenders may become more selective or require stricter credit profiles on smaller loans.

 

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Franchise Directory Is Back

The SBA has reinstated its Franchise Directory, and any franchise not listed on it will need additional review to determine eligibility.

What it means for you: If you’re planning to open or buy a franchise, confirm your brand’s SBA eligibility before applying. Unlisted franchises could delay your funding timeline or lead to added paperwork.

 

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Partial Buy-Ins Require Full Seller Guarantee for 2 Years

In partial buy-in scenarios, sellers must personally guarantee the SBA loan for 24 months, regardless of how much ownership they retain. This reinstated rule applies to all deals where a buyer is acquiring a portion of a business.

What it means for you: Multi-step buy-ins are now discouraged. If you’re planning to acquire a business gradually, the SBA will expect the seller to be fully on the hook for 2 years, which could change the tone of negotiations.

 

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100% Financing Allowed for Same-NAICS Acquisitions

If a business is acquiring another company in the same 6-digit NAICS code, 100% financing is allowed without any equity injection.

What it means for you: This is great news for existing operators expanding into similar businesses. However, lenders may still require a down payment depending on the risk profile — so have your cash ready.

 

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PLP Lenders Must Submit Loans Under PLP Authority

PLP (Preferred Lender Program) lenders must now submit all eligible loans under PLP, meaning no more opting into general processing (GP) for deals they could otherwise approve in-house.

What it means for you: Expect lenders to be more careful and thorough upfront. Anticipate longer timelines, as documentation and deal structure will face more stringent internal reviews.

 

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Stricter Ownership Requirements

All individuals with ownership in the business—regardless of their ownership percentage—must now be either U.S. citizens or lawful permanent residents (green card holders).

What it means for you: Even minority shareholders must meet SBA citizenship or residency requirements. If your business has multiple partners or investors, ensure that all parties are compliant before applying.

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Bottom Line:

If you’re planning to fund a business for the rest 2025, now is the time to get organized, get educated, and get strategic. These rule changes don’t eliminate opportunity — but they do reward preparation.

At Commercial Capital Ltd., FL, we help borrowers and brokers adapt fast to changing SBA policy so you can move forward with confidence.

Have questions? We’re ready to guide you. Email us at info@comcapfl.com or call us at (888)959-1648 to discuss how we can fund your business today.

 

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