SBA has issued Procedural Notice 5000-875701, Sunset of SBSS Score for 7(a) Small Loans, which formally announces the discontinuation of use of the FICO® Small Business Scoring ServiceSM Score (SBSS Score) for 7(a) Small Loans and amends SOP 50 10 8, to provide the revised underwriting requirements for these loans.  The notice shows a publication date of January 16, 2026, and an effective date of March 1, 2026, for the changes. 

As indicated in the Notice, “SBA is revising the underwriting requirements for 7(a) Small loan applicants in SOP 50 10 8 to emphasize generally accepted industry credit analysis processes and procedures, which may include use of the Lender’s own internal credit scoring models as permitted by their primary Federal regulator, provided such model does not rely solely on consumer credit scores.  Small Business Lending Companies (SBLCs) that do not make non-SBA guaranteed loans, so do not have similarly-sized, non-SBA guaranteed commercial loans in their portfolio, may continue to use their credit scoring models as currently allowed for SBA Express loans, but they will be required to provide their credit scoring model for review by SBA on an annual basis. 

However, it is important to note that the notice makes clear that lenders are NOT required to use credit scoring. Those lenders that use a credit scoring model still will be required to perform other credit underwriting analysis as described in the Notice and summarized below. 

For this update, SBA is revising SOP 50 10 8 (pp. 168-172) to:

  • Renumber existing paragraph C.2.a.ii, 7(a) Small Equity Requirements, as Paragraph C.2.a.iii.; and,
  • Remove in its entirety Section B, Chapter 2, Paragraph C.2.a.i. (beginning on page 168), and replacing it with new text (summarized below).

The remainder of Section B, Chapter 2, Paragraph C.2.a. is unchanged.

The new underwriting criteria requires a lender processing a 7(a) Small Loan to: 

  • Summarize the business, ownership, and loan request.
  • State why credit is not available elsewhere.
  • Demonstrate reasonable assurance of repayment ability, including –
    • Analysis of the credit history of the Applicant (and Operating Company, if applicable), its Associates, and guarantors.
    • Analysis of the Applicant’s (and Operating Company, if applicable), debt service coverage, and two most recent months of commercial bank activity or statements, and projected earnings (if applicable); on all business debt, inclusive of new SBA loan proceeds.  [See notice for additional information re calculation of operating cash flow (OCF) and debt service (DS) coverage ratio.]
      • For 7(a) Small Loans, the Applicant’s debt service coverage ratio must be equal to or greater than 1.1:1 on a historical and/or projected cash flow basis.
    • Addressing whether life insurance or other insurance (i.e., insurance other than hazard insurance) will be required.
    • Addressing other specifics relating to the specific loan as applicable, including:
      • Description of any proposed collateral and estimated value.
      • For loans greater than $50,000, when 50% or more of the loan proceeds will be used for working capital, explanation of why this level of working capital is necessary and appropriate for the subject business. [Note:  the “fully secured” collateral requirements regarding this situation remain unchanged (p. 175).]
      • The terms of any seller financing and standby agreements. 
      • Discussion of any liens, judgments, or pending litigation, including divorce proceedings.
      • If the application involves a franchise (as defined by FTC), review of any credit information provided, such as the number of failed franchisees and cash flow projections provided by the franchisor.
      • Review of any management agreement (unless the management agreement is part of the franchise disclosure documents for a brand listed on the Franchise Directory) to determine if it results in an ineligible passive company.
      • Analysis of any debt refinancing, including justification and original purpose.
      • Analysis of the effect any affiliates may have on the ultimate repayment ability of the Applicant.

SBA Express loans are not affected by these changes.

Consistent with the changes set out in the Notice, SBA also is amending Appendix 2, Acronyms (p. 400), to delete the reference to “SBSS Small Business Scoring ServiceSM Score”.

The new underwriting requirements will be mandatory for all 7(a) Small Loans approved by SBA on or after March 1, 2026.  Please read the notice in its entirety for all details regarding the changing requirements.  Please send any questions or comments on the upcoming changes to:  naggl.org/contact-us. 

SBA has advised that it will provide training on the new requirements during the 7(a) Connect Quarterly Update to be held on January 20, 2026, at 3 PM ET.  Click to access.  And watch for information from NAGGL regarding its upcoming webinar on 7(a) Small Loan underwriting.