SBA’s updated SOP 50 10 8.1 becomes effective October 1, 2026.
While many of the revisions incorporate policy changes SBA has already implemented through notices and other guidance, there are several new requirements and changes that may impact SBA 504 projects.
So, what changes on October 1?
- Minimum debt service coverage ratio increases from 1:1 to 1.15:1.
- For 504 projects with total project costs of at least $5 million, SBA will require the Third Party Lender’s credit memorandum or underwriting analysis to be submitted to support SBA’s underwriting and review.
- CDCs will be required to analyze the highest level of financial reporting available, including audited, reviewed or CPA-compiled financial statements and business tax returns.
- For an existing business starting another business under the same 3-digit NAICS code with identical ownership, SBA will consider the transaction a business expansion rather than a New Business.
- SBA has removed the $16.5 million cap on 504 eligible energy projects.
As with any new SOP, there will be details to work through as the new requirements are implemented. Ally Dakota Development is reviewing the changes and will continue working with our lending partners to make sure new 504 projects are structured in accordance with the updated guidance.
Have a 504 project you’re considering? Send it our way early and let’s take a look at it together.