Big changes for SBA borrowers in 2025: What you need to know

Changes that could affect your eligibility, documentation, and cost

If you're considering an SBA 7(a) or 504 loan this year, there are several important changes that could affect your eligibility, documentation, and cost.

Here’s a quick look at the most impactful changes borrowers should be aware of:

1. Prudent Lending Rules are Back.

SBA Lending has undergone a major reset in 2025, with more structure, clearer rules, and a renewed focus on consistency. While some requirements have tightened, the overall process is becoming more predictable and transparent. This is not the end of the world! Our experienced lenders have seen these rules before and will know how to help you navigate them.

2. Tighter Citizenship and Ownership Requirements.

SBA now requires that 100% of a business’s ownership be held by U.S. citizens, U.S. nationals, or Lawful Permanent Residents (LPRs). Businesses with any foreign or temporary visa ownership are no longer eligible.

3. More Identity Verification Up Front.

There was a lot of fraud during the pandemic. Part of the remedy means that all owners must now have their date of birth entered into SBA’s loan system, E-Tran. This applies regardless of ownership percentage and is mandatory at the time of submission. To avoid delays, make sure your lender has accurate, complete information.

4. Guaranty Fees Are Back.

For loans approved on or after March 27, 2025, SBA has reinstated upfront guaranty fees and lender service fees. Businesses owned 51% by Veteran(s) applying for SBA Express loans remain exempt, but most other borrowers should plan for this added cost at closing. In many instances, these funds can be financed into the loan. They are a necessary evil to keep the SBA program solvent.

5. Updated Credit Scoring Guidance.

For 7(a) Small Loans, SBA has increased the minimum SBSS credit score threshold to 165 for small loans of $350,000 or less.

6. More Changes are Coming June 1.

A new Standard Operating Procedure (SOP) takes effect on June 1, 2025. This will bring even more changes to the credit standards and eligibility rules but should also make it easier for borrowers to compare loan options across lenders and understand what’s required to qualify.

What does this mean for you as a borrower? Hopefully, as little as possible, especially if your financial partner is an SBA Preferred Lender like First Financial Bank. As an SBA Preferred Lender with delegated authority, we have the experience and the ability to make credit decisions in-house, resulting in faster turnaround times for borrowers, in most cases. This autonomy helps us to strengthen our relationships with you, our clients, due to efficient and personalized service.

We work vigilantly to stay in front of all the changes and to integrate these into our workflows so that they minimize any impact on you. There will be some more paperwork, and likely some more fees. Overall, the start to finish should be business as usual and you should still consider SBA lending as a practical option for meeting this year’s business goals.