Understanding the Fundamental Shift in SBA Lending
The SBA’s issuance of SOP 50 10 8, effective June 1, 2025, represents more than routine regulatory updates—it signals a deliberate recalibration of the 7(a) loan program. At Windsor, we’ve analyzed these changes in context of historical SBA policy patterns and market conditions to provide a deeper understanding of their implications.
Why These Changes Matter
The administration’s first 90 days brought rapid policy shifts through seven procedural notices, aligning with three core objectives:
- Citizenship Requirements (Policy Notice 5000-865754)
- CA SBLC Rescissions (Procedural Notice 5000-865355)
- SBA Form 1919 Updates (Information Notice 5000-865585)
- Environmental Policy Changes (Procedural Notice 5000-866054)
- Fee Structure Revisions (Information Notice 5000-865775)
- Owner DOB Requirements (Procedural Notice 5000-866498)
- Guaranty Purchase Processing (Procedural Notice 5000-866946)
These notices collectively reflect three strategic priorities: restoring financial sustainability, enhancing operational efficiency, and strengthening program integrity through fraud reduction.
From Zero-Subsidy to Deficit
For the first time in over a decade, the SBA 7(a) program operated at a $397 million deficit in FY 2024, resulting from SOP 50 10 7.1 policies that:
- Increased the small loan threshold to $500,000
- Eliminated guarantee fees for small loans
- Introduced “do what you do” underwriting flexibility
- Permitted minimal business credit scoring requirements
The consequences: default and delinquency rates doubled while fee income disappeared. Small loans under $500,000 represented 80% of total loans but only 27.7% of dollars lent.
Key Policy Reversals in SOP 50 10 8
The new SOP systematically dismantles these high-risk policies, instituting:
- Stricter underwriting standards
- Revised fee structures
- Enhanced due diligence requirements
- Tightened citizenship verification
- More rigorous lender oversight
Back to Basics
For SBA lending veterans, many changes represent a return to pre-COVID standards. The elimination of ambiguous “do what you do” provisions actually simplifies compliance, though newer concepts like partial changes of ownership and updated citizenship requirements remain.
Stay Ahead of SBA Changes with Windsor
In the coming weeks, we’ll publish detailed analyses on key topics such as, equity injection requirements, credit elsewhere tests, citizenship verification, and franchise lending. Don’t risk missing critical guidance as the June 1st implementation deadline approaches.
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About Windsor Advantage
Windsor Advantage provides banks, credit unions and CDFIs with a comprehensive outsourced SBA 7(a) and USDA lending platform.
Since 2010, Windsor has processed more than $2.8 billion in government guaranteed loans and currently services a portfolio in excess of $2 billion (as of December 31, 2021) for over 100 lender clients nationwide. With more than 150 years of cumulative SBA lending experience, cutting edge technology, rigid controls and consistent processes, Windsor is uniquely qualified to assist any size lender with implementing a thoughtful and profitable government guaranteed lending initiative.
The Company is headquartered in Chicago, IL with offices in Indianapolis, IN and Charleston, SC.