SBA Feasibility Study | 7(a) & 504 Rules Under SOP 50 10 8.1

What Changed

Three texts in sixteen months, and only the last one counts.

SBA issued SOP 50 10 8.1 on August 14, 2026, then replaced it on September 25 with a Technical Policy Updates version before either took effect. The August text never governed a loan, yet most summaries still in circulation describe it. The table reads the three editions side by side; the right-hand column is the rule a lender applies today.

SOP 50 10 8 (June 2025), the August 2026 text of 8.1, and 8.1 with Technical Policy Updates (October 1, 2026).
Rule	SOP 50 10 8	8.1, August text	8.1 with Technical Policy Updates
Acquisition coverage test	1.15x, projections allowed	Historical floors introduced	1.25x Initial Acquisition, Owner Buyout, ESOP and Cooperative; 1.15x Business Expansion, all on trailing EBITDA
Initial Acquisition equity	10%, seller standby debt up to half	No primary record of a different rule	10% of project cost, cannot be reduced; limited sources capped at half
Lender's own business valuation	$250,000 of the amount financed net of real estate and equipment	no internal valuation option	Business Purchase Price of $350,000 or less
Quality of earnings	not required	no provision for a buyer-commissioned report	Required at a $3 million Business Purchase Price; a buyer's report is usable after the lender's vendor reviews it
Acquisition amortization	blended, or 25 years when 51% or more of proceeds were real estate	10-year cap with no special purpose exemption	10 years on the business; up to 25 when real estate is 85% or more of project cost and the special purpose property is integral to the business
7(a) Small and SBA Express for acquisitions	Permitted	not permitted	Permitted, same coverage floors
7(a) Small credit standard	FICO SBSS score of at least 165	Unchanged from the notice of February 2026	1.10x coverage plus two months of bank statements
504 coverage	1:1	Historical floor introduced	1.15x on trailing EBITDA
504 bank loan term	Minimum 7 or 10 years	bank loan could not amortize beyond the debenture term	Minimum term kept; the amortization cap removed
504 jobs	$90,000 per job; $140,000 small manufacturers and energy	As today	$95,000 per job; $150,000 small manufacturers and energy
Trust guaranties	20% or more	a different threshold, per SBA's notice; the August figure is in no primary document	20% or more, with the trustor's personal guaranty
Personal financial statement age	120 days	As today	90 days

Left and middle columns are historical. The August column is filled only where SBA's Technical Updates notice (Information Notice 5000-882227) describes the change; where it is silent the column says so. Sources 1 to 3.

Appendix 15

Acquisitions now close on last year's numbers.

Every 7(a) change of ownership falls into one of four categories, and each carries a coverage floor measured on the acquired business's own history rather than the buyer's forecast.

Change-of-ownership categories and their debt service coverage floors under Appendix 15.
Category	Who qualifies	Coverage floor
Initial Acquisition	A new majority or largest owner who was not an owner before, or an employee of fewer than 24 months. The default category.	1.25:1
Business Expansion	An operating business with two full fiscal years under current ownership buying another in the same four-digit NAICS group.	1.15:1
Owner Buyout	Existing owners, or employees of at least 24 months, buying out a departing owner. Outsiders may take less than half and may not become the largest holder.	1.25:1
ESOP and Cooperative	An employee trust or cooperative acquiring a controlling interest of 51% or more.	1.25:1

Appendix 15, Paragraphs A and C of SOP 50 10 8.1. Source 1.

The coverage ratio is historical EBITDA over total post-transaction debt service, on the last fiscal year-end or the average of the last two. Add-backs are allowed when the lender justifies each one, including rent where the owner-occupied real estate is part of the deal, and an adjusted ratio still has to clear a 1:1 global test.

The projection rule is the hinge of the whole edition. A lender must still evaluate the buyer's post-closing forecast, but projections are reviewed but cannot meet the floor, except an owner-occupied Special Purpose Property acquisition whose price the appraised value fully supports, where the floor may be met on projections within two years. Where a deal has no clear continuity of operations, the lender may underwrite it as a start-up instead, which brings the start-up equity and projection rules with it. Seller debt that is not on full standby counts in the debt service, and an interest-only seller note is tested as if it amortized over ten years. Seller earnouts are prohibited; a rebate the buyer earns must pay down the loan; a working-capital true-up in the purchase agreement is not a rebate.

Equity Injection

Ten percent, and where it may come from.

Minimum equity injection by transaction type.
Transaction	Minimum	Flexibility
Initial Acquisition	10% of total project cost	None. The injection cannot be reduced or eliminated.
Business Expansion and Owner Buyout	10% (Owner Buyout on the purchase price)	The lender may reduce or waive it where liquidity and working capital are adequate and the balance sheet shows no negative net worth.
ESOP and Cooperative	10%	Applies to cooperatives and to ESOP purchases generally; a loan to an ESOP buying a controlling interest of 51% or more carries no SBA injection requirement.
Start-up (any 7(a) loan)	10% of total project cost	Applies to a business with one year or less of revenue, and to an acquisition underwritten as a start-up.
504 project	10%	15% for a new business or a limited or special purpose property; 20% for both.

Appendix 15, Paragraph C.2; Section B, Chapter 1; Section C, Chapter 1 and 13 CFR 120.910. Sources 1 and 4.

Unlimited sources are unborrowed cash, a personal loan repaid from outside the business, an unconditional grant, and verified prepaid project expenses. Limited sources are seller debt on full standby for the life of the loan, other full-standby debt, and a non-controlling minority investor holding under 20%; together they may supply no more than half of the injection. education, advisory and Agent fees are not equity, while the out-of-pocket cost of the business valuation and QoE can count toward it. A seller note written into an acquisition can be refinanced only after 36 months in place and current, and in an Initial Acquisition or Business Expansion a seller may stay on as a consultant for at most 24 months in aggregate, extensions included.

Financial Due Diligence

The valuation sets the ceiling; the quality of earnings sets the cash flow.

Every change of ownership needs a business valuation, and the number that drives the thresholds is the the purchase-agreement price less the appraised value of owner-occupied commercial real estate, which the SOP calls the Business Purchase Price. At $350,000 or less the lender may value the business itself, unless buyer and seller are closely related. Above that, an independent Qualified Source prepares the valuation for the lender; a report prepared for the buyer or the seller cannot be used. For a Special Purpose Property the valuation is a going-concern appraisal by a Certified General appraiser with at least four comparable assignments in the last 36 months, allocating value among land, building, equipment and intangibles.

Total acquisition debt, including any seller note not on full standby, is capped at the valuation; a price above it must be bridged with equity. At a Business Purchase Price of $3 million or more, an Initial Acquisition or Business Expansion also needs a Quality of Earnings report with a cash proof covering the trailing twelve months plus the last two fiscal years. Exempt from the QoE: Owner Buyout, ESOP & Cooperative, and any acquisition of an owner-occupied Special Purpose Property. A report the buyer commissioned is usable when one of the lender's approved vendors reviews it and the review is in the file; never a report prepared by or for the seller. The lender must then run the coverage test on the QoE's earnings, not the seller's.

Special Purpose Property is defined as a limited-market property with a unique physical design, special construction materials, or a layout that restricts its utility to the use for which it was built. SBA's example list is not closed, and it names car washes, gas stations, hotels and other lodging, marinas, nursing and assisted living, funeral homes with crematoriums, medical facilities and service centers with pits among its entries. Self-storage, restaurants and day care are not on the list, although Appendix 15 uses storage units and hotels as its own examples of special purpose acquisitions that the real estate fully secures.

Amortization and Maturity

Ten years on the business, twenty-five on the building.

Maturity rules by use of proceeds.
Use	Rule
7(a) change of ownership	10-year maximum amortization on the business, goodwill, soft costs and working capital. Real estate bought with the business is a separate loan or a blended maturity, and only the real estate portion may run up to 25 years.
Special purpose exemption	Up to 25 years on the whole loan when 85% or more of the use of total project costs is real estate and the owner-occupied Special Purpose Property cannot be separated from the business being bought.
7(a) mixed purpose, not an acquisition	blended maturity, or up to 25 years when 51% or more of proceeds are real estate; not available for changes of ownership.
7(a) real estate, equipment, working capital	Real estate up to 25 years plus a construction period; equipment generally 10 years, up to 15 on IRS useful life; working capital and intangibles 10 years.
504 debenture	10, 20 or 25 years; the 25-year term is reserved for real estate, machinery and equipment take at least 10, and a mixed project follows the asset category that is the majority of loan proceeds. Fixed assets must have a useful life of at least 10 years.

Appendix 15, Paragraph B; Appendix 17; Section C, Chapter 1, Paragraph D. Source 1.

7(a) Small and SBA Express

Back in the acquisition market, on the same floors.

7(a) Small loans run to $350,000 and SBA Express to $500,000. The August text barred both from changes of ownership; the Technical Policy Updates restored them, subject to Appendix 15. Three things differ for a small acquisition: the lender may do its own valuation when the Business Purchase Price is $350,000 or less, the fully-secured test need not reach other commercial real estate the owners hold, and nothing else is relaxed. The 1.25x Initial Acquisition floor applies at every loan size.

Outside acquisitions, a 7(a) Small loan is underwritten to 1.10:1 coverage, historical or projected, plus the two most recent months of business bank statements; projections must reach 1.10x within one year; does not apply to changes of ownership. The SBSS credit score that once screened these loans is gone from the text; SBA retired it for loans approved on or after March 1, 2026. A Standard 7(a) loan above $350,000 is underwritten to 1.15:1, historical and/or projected, with 1:1 global coverage; start-ups reach 1.15x within two years.

504

The 504 program now has a coverage floor of its own.

504 underwriting and structure under SOP 50 10 8.1.
Element	Rule
Coverage	1.15:1, historical EBITDA over combined post-transaction debt service, last fiscal year-end or two-year average; projections analysed only where history falls short. A projection-based project needs at least two years of projections and liquidity to cover any Year 1 shortfall.
Structure	Third Party Lender 50%, debenture 40%, borrower 10%; debenture 35% at a 15% contribution and 30% at 20%.
Third Party Lender term	7 years for a 10-year debenture, 10 years for a 20- or 25-year debenture. The August text's bar on a bank amortization longer than the debenture was removed in the Technical Updates. The bank's rate may not exceed 6% over New York Prime or the State maximum if that is lower.
Jobs	One job created or retained per $95,000 of debenture guaranteed by SBA, or $150,000 for a small manufacturer or an energy public policy project; set by Federal Register notice for loans approved on or after October 1, 2025.
Occupancy	51% of an existing building, 60% of new construction (up to 20% may be leased permanently and a further 20% temporarily, to be occupied within 3 and 10 years), with boat slips and docks counting as rentable property for a marina.

Section C, Chapter 1; 13 CFR 120.861, 120.910 and 120.921; Federal Register 2025-19072 and 2026-20080. Sources 1, 4, 6 and 7.

Loan Limits

$10 million across the two programs, in the right order.

Since July 4, 2026, a borrower's outstanding 7(a) balance no longer reduces its 504 capacity. A business may carry up to $5 million of 7(a) debt and, with the 7(a) loan approved first and the 504 project approved second, up to $5 million of 504 debentures, or $5.5 million per project for a small manufacturer or an energy project. Policy Notice 5000-879058, now integrated into 8.1.

For a capital-intensive operator the sequence is the point: working capital, equipment and the business itself on 7(a), the facility on 504, each underwritten to its own coverage floor. A single 504 project may also bundle several fixed assets, a building and a production line financed at the same time, within the debenture limit.

Fiscal Year 2027 Fees

Fees for loans approved through September 30, 2027.

The schedule applies to loans approved October 1, 2026 through September 30, 2027, on the approval date, not the loan number. The manufacturer, food supply chain and rural waivers carry over into the 504 program without a size cap.

7(a) upfront guaranty fee for maturities over twelve months, FY2027.
Gross loan amount	Upfront fee
$150,000 or less	2% of the guaranteed portion
$150,001 to $700,000	3% of the guaranteed portion
$700,001 to $5,000,000	3.5% of the guaranteed portion up to $1,000,000, plus 3.75% above $1,000,000
maturity of 12 months or less	0.25% of the guaranteed portion

Lender's annual service fee 0.55% of the outstanding guaranteed balance, not passed to the borrower. Information Notice 5000-881797. Source 8.

Fee waivers and 504 fees, FY2027.
Item	FY2027 rule
7(a) upfront fee waiver	0% on loans of $700,000 or less to the three waiver categories.
Waiver categories	manufacturers (NAICS sectors 31 to 33) food supply chain (NAICS 1111, 1112, 1113, 1121, 1122, 1123, 1124, 1125, 1129, 1141, 1151, 1152, 423820, 4244, 4245, 424910, 445110, 484220 and 484230 limited to refrigerated and frozen trucking, farm products, grain and livestock, 493120, 493130) businesses located in a rural area
Rural county test	A business located in a county that the U.S. Census Bureau has defined as at least 30 percent rural. Restaurants, lodging and most service businesses qualify only through this test.
504 fees	Upfront 0.50%, annual 0.203% (0.204% for debt refinance without expansion); both 504 fees waived for the same three categories, including 504 refinance loans. Information Notice 5000-881796.
Base rates, October to December 2026	Prime 7.00%; SBA Optional Peg Rate 5.00% for the quarter. Variable 7(a) spreads over the base rate are capped at 6.5% to 3.0% by loan size.

Information Notices 5000-881797 and 5000-881796; Federal Register 2026-20080; Federal Reserve H.15. Sources 7 to 9.

Application File

Ninety days on the personal financial statement.

Each owner of 20% or more and each guarantor signs a personal financial statement dated within 90 days of submission, on both the 7(a) and 504 sides. Business and interim financial statements may be up to 120 days old, and an acquisition file carries the seller's statements for the last three fiscal years, verified against IRS transcripts.

Where the Study Fits

The regulation says "may require." The underwriting says what for.

Under 13 CFR 120.160(b), SBA may require a feasibility study. The authority is discretionary, and nothing in SOP 50 10 8.1 turns it into a mandate. What the new edition changes is the question the study has to answer.

An acquisition now closes on historical EBITDA, so the market analysis in a change-of-ownership file explains trailing performance: whether last year's revenue was the trade area's doing or the seller's, whether the customer base and margins survive the handover, and whether the adjusted earnings the Quality of Earnings report produces are the ones the market will keep paying. A forecast that cannot carry the coverage test is still worth testing, because the lender must evaluate it, but it no longer decides the credit.

Start-ups, ground-up construction and expansions still depend on projections, and so does the owner-occupied special purpose acquisition the SOP carves out, where the appraised value supports the price and the lender may rely on a two-year projection instead of history. For those credits the study is the evidence under the projected coverage ratio, and under 8.1 the lender must file an analysis of the variance between what the business earned and what the buyer expects. That variance analysis is market work.

Initial Acquisition on historyMarket analysis of trailing performance, customer and margin durability, and the add-backs the coverage test relies on.
Special purpose acquisition on projectionsDemand, capture and a two-year projection reconciled to the business's own history, with the variance explained.
Start-up or ground-up buildIndependent demand and capture evidence for a projection that must reach 1.15x within two years.
504 projectHistorical coverage at 1.15x, or two years of justified projections and Year 1 liquidity where history falls short.

SBA Questions

SBA feasibility questions under SOP 50 10 8.1.

Does an SBA loan require a feasibility study?

Not by regulation. 13 CFR 120.160(b) says SBA may require one, and SOP 50 10 8.1 does not add a mandate. Lenders order a study where repayment depends on a projection, which under 8.1 means start-ups, construction, expansions and the special purpose acquisitions the SOP lets close on projections.

Which SOP governs my application?

SOP 50 10 8.1 with Technical Policy Updates governs applications received by SBA on or after October 1, 2026. Applications submitted through September 30, 2026 stay under SOP 50 10 8. The August 2026 text of 8.1 never took effect.

Can an acquisition be underwritten on projections?

Only in two cases. An owner-occupied Special Purpose Property acquisition whose price the appraised value fully supports may meet its coverage floor on a two-year projection, and a deal with no continuity of operations may be underwritten as a start-up. Every other change of ownership must clear 1.25x (or 1.15x for a Business Expansion) on the acquired business's trailing EBITDA.

Is a restaurant or a self-storage facility special purpose property?

Neither appears on SBA's example list, which names car washes, gas stations, lodging, marinas, nursing and assisted living, funeral homes with crematoriums, medical facilities and service centers with pits among its entries. The list is not closed, and Appendix 15 itself uses storage units as an example of a special purpose acquisition the real estate fully secures, so the lender's classification decides.

What does the FY2027 fee waiver cover?

A 0% 7(a) upfront fee on loans of $700,000 or less, and both 504 fees waived at any size, for manufacturers, the listed food supply chain codes and businesses in a county at least 30 percent rural, on loans approved through September 30, 2027.

Worked Cases

SBA 7(a) and 504 worked cases.

Hospitality and outdoor recreation

Storage

Fuel, auto and travel

Health, care and services

Food and retail

Research

Research notes for SBA 7(a) and 504 studies.

Sources

Primary sources and dates.

Every figure on this page is read from the primary text named below and is held in one data file, so a future SOP edition or fee notice is a single edit.

Methodology and market data reviewed by Mark Otava · Updated October 10, 2026

U.S. Small Business Administration, SOP 50 10 8.1 with Technical Policy Updates, Lender and Development Company Loan Programs, published September 25, 2026, effective October 1, 2026: Section A, Chapters 1, 3 and 5; Section B, Chapters 1 and 2; Section C, Chapter 1; Appendices 3, 15, 17 and 20. SOP 50 10 document page.
SBA Information Notice 5000-882227, Issuance of Technical Updates to SOP 50 10 8.1, published September 25, 2026; and Information Notice 5000-880695, Issuance of SOP 50 10 8.1, published August 14, 2026.
SBA SOP 50 10 8, effective June 1, 2025 (superseded), for the historical column of the comparison table.
13 CFR 120.160 (loan conditions, including the discretionary feasibility study), 120.131 (occupancy), 120.861 (job opportunities), 120.910 (504 borrower contribution) and 120.921 (Third Party Loan terms), eCFR current to October 7, 2026.
SBA Policy Notice 5000-879058, Coordination of 7(a) and 504 for Maximum Loan Limits, published May 18, 2026, effective July 4, 2026.
Federal Register 2025-19072, 90 FR 47117 (September 30, 2025), Development Company Loan Program job creation and retention requirements.
Federal Register 2026-20080, 91 FR 62585 (October 1, 2026), Interest Rates: Optional Peg Rate for the October to December 2026 quarter and the 504 Third Party Lender maximum rate.
SBA Information Notices 5000-881797 (7(a) fees, FY2027) and 5000-881796 (504 fees, FY2027), published September 3, 2026, effective October 1, 2026; SBA Procedural Notice 5000-876777, Sunset of SBSS Score, effective March 1, 2026.
Board of Governors of the Federal Reserve System, H.15 Selected Interest Rates, release of October 9, 2026 (bank prime loan rate).

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