SBA has issued Procedural Notice 5000-862692, Extension and Rescission of Notices Previously Published and Procedural Updates to SOP 50 10 7.1 and SOP 50 55 with an effective date of December 6, 2024. The notice has two purposes: it further extends, for 2 years (unless superseded by a new version of the SOP), a number of previously issued notices, and it announces other procedural updates to SOP 50 10 7.1.  As indicated in the notice, the new requirements take precedence if there are any conflicts between the newly published guidance and the guidance in the notices that are being extended. 

Among the notices affecting the 7(a) program being extended are:

  • Procedural Notice 5000-852522 (December 6, 2023), Updates to SOP 50 10 7.1 (with modifications); 
  • Procedural Notice 5000-855070, (March 5, 2024), Adoption of the Alternative Size Standard for SBA’s 7(a) and 504 Loans Incorporating an Adjustment for Inflation; 
  • Procedural Notice 5000-857477 (May 31, 2024), Updates to SOP 50 10 7.1 and SOP 50 45 3 Related to the Criminal Justice Final Rule; and,
  • Procedural Notice 5000-858322 (June 24, 2024), 7(a) and 504 loans to Cooperatives and valuation requirements for 7(a) loans to ESOPs for changes of ownership.  

See the new notice for a complete list of the prior notices that are being impacted, including those impacting only the 504 program.  

The new notice also provides policy updates, some of which affect both the 7(a) and 504 program, and some which affect only one of the programs.  The updates impacting 7(a) include guidance on:

  • Landlord reimbursements for tenant improvements; 
  • Disclosure of personal financial resources by non-owner spouse or supplemental guarantors;
  • Verification of tax information submitted to IRS;
  • Participation in projects that obtain C-PACE financing;
  • Maximum loan maturity for loans for all types of changes of ownership;
  • Liens on vehicles; 
  • Collateral requirements for change of ownership 7(a) Small and SBA Express loans;  
  • Do-it-yourself construction;
  • Eligibility of loans for partial changes of ownership (including clarification that such transactions are eligible whether acquisition is by an individual or by an entity, and that they also are eligible if ownership change is made through multiple steps); and,
  • Eligibility for 7(a) refinancing of merchant cash advances, factoring agreements, and non-amortizing credit facilities.  

Please see the notice for complete details about the changes, and for information regarding other changes that only apply to the 504 program.

And watch for an announcement from NAGGL about an upcoming webinar that will discuss the information provided in the notice.