SBA Tightens Business Acquisition Loan Rules Starting October 1 With Stricter Underwriting Standards

The Small Business Administration will implement new loan rules on October 1, 2026, that significantly tighten underwriting standards for business acquisitions and introduce new documentation requirements for buyers and sellers.

The changes are part of Standard Operating Procedure 50 10 8.1, which consolidates several 2026 policy notices and introduces permanent regulations for the SBA's lending programs. Applications assigned an SBA loan number on or after October 1 must follow the new rules, while those already in process continue under existing guidelines.

The most significant changes affect business acquisitions. The debt service coverage ratio requirement for first-time acquisitions and owner buyouts rises from 1.15 to 1.25, meaning buyers must demonstrate stronger cash flow relative to their debt obligations.

Transactions with a business price of $3 million or more, excluding real estate, now require an independent quality-of-earnings report to verify the financial sustainability of the business being purchased. All business purchases also require an independent business valuation from an accredited source.

For partial ownership changes, outside buyers are prohibited from acquiring 50 percent or more of a business and cannot become the largest owner without triggering a full-acquisition underwriting process. Changes of ownership are no longer eligible for the streamlined small-loan processing path, regardless of loan size.

The SBA also updated eligibility requirements. All direct and indirect owners and guarantors must be U.S. citizens or nationals with a primary residence in the U.S. or its territories.

On the positive side for borrowers, the SBA decoupled its 7(a) and 504 loan programs. A borrower can now access up to $5 million in 7(a) financing and $5 million in 504 financing simultaneously, for a combined total of $10 million, as the programs no longer count against each other's limits.