Industry Insights
SBA SOP 50 10 8 – Video 2 – Program & Eligibility Changes Part 2
April 28, 2025
Video #2: Program & Eligibility Changes Part 2
Part 2 covers the expanded Credit Elsewhere Test, new documentation requirements, and lender responsibility for specialized structure eligibility.
Credit Elsewhere Test: Expanded to include liquidity of applicants, owners, and guarantors. Add a resources test to the spreading task; underwriters should document this in the credit memo for now.
Specialized Structures: Lenders are solely responsible for determining eligibility for ESOPs, ROBs, 401(k) plans, and cooperatives; SBA will not review these for eligibility.
Collateral and Insurance Requirements
Collateral: Required on all loans over $50,000, including primary residences and other available collateral from guarantors, owners, and borrowers.
Hazard Insurance: Mandatory for loans over $50,000; loans cannot be approved without it. This changes prior SOP discretion for loans $500,000 and under.
Removal of “Do What You Do” Philosophy
Structural Impacts: The “Do What You Do” philosophy has been eliminated and some prescriptions have been added in its place, affecting:
- Refinancing same-institution debt.
- MCA debt (now ineligible for refinance).
- Updated terms and conditions document will provide more detail on each loan.
- Partial change of ownership requirements.
- Loan maturities (now allows blended maturities for ownership changes).
- Lender credit memo analysis (requires more in-depth analysis).
- Equity injection requirements (effectively reverting to SOP 50 10 6 standards some differences).
Documentation and Closing Updates
Document Updates by 6/1:
- Form 1050 (or lender equivalent) required for every loan.
- Form 601 removed as a requirement.
- Lender certifications (details to be reviewed).
- State-specific provisions in loan documents (already compliant).
- Borrower certifications at closing (new requirements to be confirmed).
Closing Requirements: Lenders must secure all required collateral and meet conditions before disbursement, including valid/enforceable security interests, business licenses, cash/equity injections, and appraisals/evaluations.
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