Tips from our SBA Program Director

Navigating New SBA Rules

As SBA approaches a new fiscal year for the program, 2023 has seen the most sweeping changes in program history. SBA designed most of the changes to expand the program with more lending available, especially underserved groups. Other changes are designed to increase the number of lenders using the program.  

Decision Making:

Probably the most interesting change is allowing lenders in the program to focus more on using their own internal credit policies to drive decision making on SBA loans. Often described as “do what you do”, lenders can now mirror many of their own policies when deciding to use SBA financing for a borrower. There are still some specific requirements around determining whether or not credit is available elsewhere conventionally, following specific program credit underwriting requirements on larger loans, and policies for debt refinancing and changes of ownership. However, in many cases these requirements have been relaxed to allow a lender more flexibility in using SBA to support a loan. It is unknown yet how SBA’s oversight office will interpret and enforce these new rules when conducting periodic reviews. 


Through its experience with the Paycheck Protection Program, SBA has decided that it will conduct final eligibility reviews of borrowers when the lender submits the loan either for direct SBA approval or for funding when the lender has preferred status with SBA. This can be both good and bad. For the lender, SBA is taking on responsibility for eligibility so that if later the borrower is found to be ineligible and the loan defaults the lender would be held harmless. This also means that a borrower may have additional steps or documentation required if the eligibility process finds an issue and the lender cannot have full confidence the borrower is eligible until this process is complete.

Other Major Changes:

  • SBA has eliminated the franchise directory which has been a useful tool for lenders when making a loan to a franchise. The market may see some lenders decide to avoid franchise lending, or extra cost to the borrower may arise since the franchise still has to be vetted. 
  • Changes of ownership now include partial buyouts which were previously prohibited. These could be tricky given that existing owners may be required to guarantee a debt for this purpose. 
  • Debt refinancing has been expanded significantly, but lenders may choose to be cautious since they must not refinance a debt that shifts a loss to the government. 

These are just a few of the changes. Quality SBA lenders will use prudence in their practices to ensure they are protected and the borrower receives a high quality solution to their needs.

At Community First Bank of Indiana, we’ve been a Preferred Lender with the SBA since our founding in 2003. You can feel confident working with our team as we share our 30+ years of industry experience with a specialty in delivering the U.S. Small Business Administration (SBA) programs to small businesses. 

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