In summer 2025, the Small Business Administration implemented several policy changes that aimed to tighten lending standards and reduce overall risk. From equity requirements to refinancing rules, here are some key changes for small businesses to know, and why it’s important to work closely with your banker.

Partial Change of Ownership: Anyone acquiring partial ownership of a company must now be a co-borrower on the loan. Sellers who remain as partial owners will also be required to guarantee the loan.

Equity Requirements: New start-up loans and complete ownership transfers now require a 10% equity injection.

Small Loans: The maximum size of 7(a) small loans decreased from $500,000 to $350,000. As a result, loan amounts that previously had a more abbreviated underwriting and approval process, longer repayment terms, and lower interest rates may now be less affordable and more difficult to qualify for.

Citizenship Requirements: Previously, 51% of a small business needed to be owned by a U.S. citizen in order for the business to be eligible for SBA loans. Now, that requirement has increased to 100%, which means that only U.S. citizens, U.S. nationals or permanent residents can receive SBA financing.

Refinancing Rules: Merchant cash advances and factoring agreements are no longer eligible for refinancing. Both options were previously popular financing methods for small businesses, but often resulted in high default rates.

Questions?

These changes are complex, so don’t hesitate to contact us if you have any questions. SBA lending is all our team does, and we’re here to support you. Our bankers specialize in the SBA program, are educated about these recent changes, and can help you and your business navigate the new lending standards.