SBA published SOP 50 10 8.1 on August 14, 2026, effective October 1, 2026. It replaces SOP 50 10 8 and reworks how change-of-ownership transactions, small-loan underwriting and coverage requirements are handled — which changes what evidence a 7(a) or 504 credit file has to carry.
Wert-Berater prepares independent, lender-grade feasibility studies for SBA 7(a), SBA 504 and USDA Rural Development financing. Since 1998 the firm has completed more than 4,000 feasibility study engagements representing approximately $41.2 billion in evaluated project value. Fixed fee, quoted before any work begins, never contingent on the finding or on the financing outcome.
By Donald Safranek, MSc · President, Wert-Berater, Inc. · Published August 25, 2026 · Updated August 25, 2026
On August 14, 2026 the U.S. Small Business Administration issued SOP 50 10 8.1, Lender and Development Company Loan Programs, through Information Notice 5000-880695. It takes effect October 1, 2026 and replaces SOP 50 10 8 as the origination policy governing both the 7(a) and 504 programs.
Read from the borrower's side, the direction of travel is consistent: more documentary evidence, more reliance on demonstrated historical performance, and less room for a projection to carry a transaction on its own. That does not make projections irrelevant — for start-ups, ground-up construction and expansions there is nothing but projections to underwrite — but it does raise the standard those projections have to meet, and it sharpens the distinction between the three documents lenders now commonly ask for: a quality of earnings report, a business valuation, and an independent feasibility study.
This page summarises what the published SBA notice and the early professional analyses say, and sets out where independent feasibility analysis fits. It is not legal advice, and it is not a substitute for the SOP text.
SOP 50 10 contains SBA's loan origination policies and procedures for the 7(a) and 504 programs — eligibility, underwriting, closing and the documentation each requires. Edition 8.1 was published on August 14, 2026 and carries an effective date of October 1, 2026. Until that date, SOP 50 10 8 remains the operative edition.
The most consequential reorganisation for borrowers is in change of ownership, which is now detailed in Appendix 15 across four categories: initial acquisition, business expansion, owner buyout (existing and partial change), and ESOP and cooperative transactions.
For initial acquisition and business expansion transactions with a purchase price of $3 million or more, a quality of earnings report is required. That report must include a cash proof covering both the trailing twelve months and the last two fiscal years. Debt-service coverage becomes transaction-dependent, the lender must use the earnings figure from the quality of earnings report in the coverage determination, and the report has to be retained in the loan file.
The practical effect is that the earnings number underwriting the deal is no longer whatever the seller's tax return says. It is a reconciled figure, produced by a third party, tied back to bank activity — and it flows directly into the coverage ratio.
Published professional analyses of the new SOP report that the debt-service coverage requirement for most change-of-ownership transactions increases from 1.15x to 1.25x. Together with the quality of earnings requirement, the consequence is straightforward: a growth plan is no longer able to bridge a shortfall in demonstrated historical cash flow on an acquisition. A business with genuine upside may still be difficult to finance if its existing performance does not support the proposed debt.
This is a real change in emphasis, and it is worth stating precisely what it does and does not do to projection work:
For projection-based credits, the standard has not moved but the surrounding file is tighter, which tends to expose weak assumptions faster. Our notes on DSCR requirements compared across SBA, USDA and conventional lenders and on sensitivity analysis set out how coverage is normally tested in practice.
Underwriting requirements change for both standard 7(a) loans and 7(a) small loans. The prior small business scoring service approach changes; the lender must perform a credit analysis that includes a repayment analysis using the two most recent months of bank statements, alongside other small-loan changes in the new edition.
Published analyses also report that all acquisitions will be treated as standard 7(a) transactions regardless of size, bringing requirements that include a full credit memorandum, an independent valuation, site visits for both the applicant and the business being acquired, and the historical cash-flow test. A modest acquisition can therefore attract materially more diligence than buyers have been used to — which is an argument for settling the financing structure before a letter of intent is signed rather than after.
Analyses of 8.1 also report a significant narrowing of ownership eligibility: SBA financing limited to applicants who are U.S. citizens or U.S. nationals with their principal residence in the United States, entity owners required to be created, organised or incorporated in the United States, and no loan permitted where any direct or indirect owner or SBA-required guarantor is an “Ineligible Person” as defined in Appendix 3. Lenders will need to review direct and indirect ownership carefully. Borrowers with any non-U.S.-citizen ownership should raise the question with counsel and their lender early; it is an eligibility question, and eligibility is decided before any analysis of the project matters.
Requirements for the Manufacturers' Access to Revolving Credit programme are detailed in Chapter 3 of the new SOP. The programme is aimed at manufacturers and was initially set out in Procedural Notice 5000-870260. Manufacturing borrowers evaluating working-capital structures alongside a term facility should look at how the two interact before the file is assembled.
The authority for requiring a study has not changed. 13 CFR §120.160(b) provides that SBA “may require professional appraisals of the applicant's and principals' assets, a survey, or a feasibility study.” It is discretionary, and no edition of the SOP has made a study automatic for every project. What drives the requirement in practice is the character of the credit: where repayment depends substantially on projections rather than on operating history, lenders and CDCs commonly require independent feasibility analysis. Our SBA feasibility study requirements page covers how that plays out under the SOP.
What 8.1 does change is the company a feasibility study keeps. Three documents are now routinely in play on larger transactions, and they are not interchangeable:
| Document | What it answers | Who normally prepares it |
|---|---|---|
| Quality of earnings | Are the target's reported historical earnings real, sustainable and reconcilable to cash? | Accounting firm |
| Business valuation | What is the business or the equity interest worth? | Qualified business appraiser |
| Feasibility study | Can the proposed project or operation succeed — market, technical, financial, management? | Independent feasibility consultant |
A lender asking for all three is not being redundant. A quality of earnings report tells the committee what the business has earned; a feasibility study addresses whether the plan being financed can be expected to work. Substituting one for the other is a common cause of a file coming back for more information. Related reading: feasibility study vs. business plan, acquisition and transaction diligence, and why feasibility studies get rejected.
USDA requirements are unaffected. USDA Rural Development sits under 7 CFR Part 5001, where a feasibility study is defined as “a report including an opinion or finding conducted by an independent qualified consultant(s) evaluating the economic, market, technical, financial, and management feasibility of the proposed project or operation in terms of its expectation for success.” That definition, and the independence built into it, is untouched by a change to SBA's origination SOP. See USDA OneRD feasibility study requirements and the 37 factors in Appendix A.
Also unchanged: independence. Whatever the edition, the party preparing the analysis should not be the party arranging or packaging the financing, and its fee should not depend on the outcome.
Prepared from SBA Information Notice 5000-880695, Issuance of SOP 50 10 8.1 (published August 14, 2026; effective October 1, 2026), together with published professional analyses of the new edition. Items described above as reported by published analyses — the 1.15x to 1.25x coverage change, the treatment of all acquisitions as standard 7(a) transactions, and the ownership-eligibility narrowing — are attributed to those secondary analyses rather than quoted from the SOP, and readers should confirm each against the SOP text before relying on it.
Primary sources. SBA Information Notice 5000-880695 · SOP 50 10, Lender and Development Company Loan Programs · 13 CFR §120.160 · 7 CFR Part 5001.
Wert-Berater, Inc. is an independent feasibility study and valuation firm. The firm does not arrange, package or place financing, does not accept success fees or any compensation contingent on a finding or a funding outcome, and does not provide legal, tax or accounting advice. Nothing here forecasts whether any application will be approved. SBA policy changes; confirm current requirements with your lender, your CDC or SBA.
President, Wert-Berater, Inc. — independent feasibility study consultants since 1998. More than 4,000 feasibility studies completed across all 50 states and internationally, evaluating $41.2 billion in project value for SBA, USDA, EB-5, conventional, and institutional financing decisions. Fiduciary duty runs to the lender and agency in every engagement.
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