The Small Business Administration (SBA) landscape is dynamic, and staying ahead of regulatory updates is crucial for lenders. A significant update, SOP 50 10 8, effective June 1st, 2025, brings important modifications to how Preferred Lenders Program (PLP) lenders process 7(a) loans. Understanding these changes, alongside the fundamental differences between PLP and General Program (GP) processing, is key to navigating SBA lending effectively.
What’s the Difference?
The fundamental distinction between PLP and GP submissions lies in the approving party and the speed of approval.
General Program (GP) Submissions: This is the standard route for all lenders approved by the SBA. When a loan is submitted via the General Program, it goes to the SBA’s Loan Guaranty Processing Center (LGPC) for a full eligibility review. Lenders must then wait for the LGPC’s active loan queue and communicate directly with an LGPC representative for any clarifications before the SBA issues its approval.
Preferred Lenders Program (PLP) Submissions: The PLP is a delegated authority approval that lenders can apply for once they meet specific criteria. One of the main reasons a lender aspires to be a PLP lender is the potential for faster processing times and increased certainty of the loan timeline. While PLP-approved loans still undergo a compliance check (similar to GP), they are not reviewed by the SBA. The authority to make final credit decisions rests with the lender, which can significantly accelerate the loan application process. However, this expedited process means the lender bears all the risk associated with making upfront eligibility and documentation decisions.
Important Changes for PLP Lenders: SOP 50 10 8
Historically, PLP lenders had the flexibility to choose whether to send a transaction for approval via PLP or GP. A GP submission was often used as a risk mitigation option for complex transactions where the lender could benefit from the SBA’s final eligibility determination.
Effective June 1st, 2025, this changes with the issuance of SOP 50 10 8. The SBA now requires PLP lenders to utilize their delegated authority for all loans. This strategic shift by the SBA is likely driven by a long-term goal to optimize its resource allocation. By requiring experienced PLP lenders to process all standard loans using their delegated authority, the SBA can reduce the volume of deals sent to the LGPC for review. This change aims to free up SBA resources, which will hopefully result in more efficient reviews and quicker turnaround times for the complex GP loans that still require direct SBA approval.
The new mandate has only two specific exceptions:
- Refinance of same institution debt
- For 7(a) International Trade Loans ONLY when collateral is not in a first lien position
Requesting Policy Exceptions
With this new policy, the SBA has created a dedicated email address for PLP lenders to request exceptions: [email protected]. When emailing, lenders must provide a concise summary of the facts, as the SBA has clearly stated it will not review entire case files or multiple attachments. It’s crucial to note that this email is exclusively for PLP lenders. Lenders processing loans through the General Program who wish to request a policy exception review should continue to email [email protected].
Advantages and Opportunities for PLP Lenders
The shift mandated by SOP 50 10 8 underscores the SBA’s trust in PLP lenders and presents distinct advantages and opportunities:
- Enhanced Efficiency: The mandate to use delegated authority for most loans further streamlines the approval process. This means faster turnaround times for your borrowers and a more efficient loan pipeline for your institution.
- Greater Control: With full authority for credit decisions, PLP lenders maintain greater control over their loan portfolio and underwriting standards, aligning more closely with their internal risk appetite.
- Competitive Edge: The ability to offer quicker loan approvals through PLP status can be a significant competitive advantage in attracting and retaining small business clients who value speed and predictability.
- Strategic Growth: By fully embracing their delegated authority, PLP lenders can more strategically scale their SBA lending operations, focusing on deepening relationships with borrowers and expanding their market reach.
- Focus on Expertise: This change emphasizes the need for robust internal expertise in SBA guidelines and eligibility, pushing PLP lenders to continually refine their processes and knowledge.
- Leveraging Technology: The increased autonomy highlights the benefit of leveraging technology and tools to enhance SBA loan origination efficiency and support scalable content and campaign processes.
Partnering with Windsor Advantage for a Confident PLP Transition
The new mandate from SOP 50 10 8 may seem daunting, especially for PLP lenders who have not frequently used their delegated authority. The shift from relying on the SBA for a final eligibility determination to bearing that risk internally is significant. However, you don’t have to navigate this change alone, nor do you need to consider rescinding your valuable PLP status.
This is where Windsor Advantage becomes a critical partner. With more than 150 years of cumulative SBA lending experience, our team has the deep expertise required to give you confidence in your PLP decisions. We provide banks, credit unions, and CDFIs with a comprehensive outsourced SBA 7(a) and USDA lending platform, built on cutting-edge technology and rigid, consistent processes.
For lenders concerned about the increased responsibility, Windsor Advantage acts as an extension of your team, ensuring every loan is processed with the highest level of diligence and compliance, mitigating risk while maximizing the efficiency and growth opportunities that your PLP status affords.
How This May Impact Those Seeking a Loan
As a small business owner or an individual seeking an SBA loan, these distinctions and recent changes can indirectly affect your experience.
- Potential for Faster Approvals: If your chosen lender operates under the PLP program, their ability to make final credit decisions internally could translate to a quicker loan approval process for you.
- Lender Expertise is Key: With PLP lenders now bearing more of the upfront eligibility and documentation risk, their expertise in SBA guidelines becomes even more critical.
- No Direct Change to Your Application Process: While the internal processes for lenders are changing, the information and documentation you, as a loan applicant, need to provide will largely remain the same.
Your Partner in Navigating SBA Changes
At Windsor Advantage, we are dedicated to keeping our bank and credit union partners informed and equipped to navigate the evolving SBA landscape. Our expertise in government-guaranteed lending, combined with tools like the Windsor Accel platform, helps enhance SBA loan origination efficiency. We are committed to helping you understand and implement these new requirements seamlessly. For questions about structuring loans or prequalification needs under the new SOP, please feel free to reach out to [email protected].
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