Starting June 1, 2025, the Small Business Administration (SBA) is implementing significant changes to its lending rules. For veterans aspiring to transition from military service to business ownership, understanding these updates is crucial. Let's explore how these changes impact veteran entrepreneurs and how you can navigate them effectively.

Understanding the New SBA Lending Landscape

The SBA's revised Standard Operating Procedure (SOP 50 10 8) introduces several key changes:

1. Stricter Citizenship Requirements: To qualify for SBA-backed loans, businesses must now be 100% owned by U.S. citizens, U.S. nationals, or lawful permanent residents (LPRs). This change eliminates previous allowances for partial ownership by non-citizens.
2. Reinstated Guaranty Fees: For loans approved on or after March 27, 2025, the SBA has reinstated upfront guaranty fees and lender service fees. However, businesses owned 51% or more by veterans applying for SBA Express loans remain exempt from these fees.
3. Increased Credit Score Thresholds: The minimum Small Business Scoring Service (SBSS) credit score for 7(a) small loans has been raised to 165, up from the previous threshold.
4. Elimination of "Do What You Do" Underwriting: The SBA has removed the flexibility that allowed lenders to apply their own credit standards to SBA loans. Now, lenders must adhere strictly to SBA-specific underwriting criteria.

Implications for Veteran Entrepreneurs

1. Ownership Structure Matters More Than Ever

The new 100% citizenship requirement means that any business with even partial ownership by non-citizens is ineligible for SBA financing. Veterans should ensure their business ownership structures comply with this rule to avoid disqualification.

2. Financial Preparedness is Key

With the reinstatement of guaranty fees (except for qualifying veteran-owned businesses) and higher credit score requirements, veterans need to be financially prepared. Maintaining a strong personal and business credit profile is more important than ever.

3. Navigating the Underwriting Process

The elimination of flexible underwriting standards means a more standardized and potentially rigorous loan approval process. Veterans should be ready to provide comprehensive documentation and meet all SBA criteria.

Your Next Mission: Join Our Webinar

To help you navigate these changes, Owners In Honor is hosting an online webinar:

"New Rules of SBA Lending: A Veteran’s Guide to Buying a Business"

Date: May 28, 2025 Time: 4:00 PM CST Location: https://us02web.zoom.us/meeting/register/KCXhqVIZTxqFCmYYrBJR5w#/registration

This interactive session will break down the new SBA lending rules, discuss their implications for veteran entrepreneurs, and provide actionable strategies to secure financing for your business acquisition.

Register Here

Final Thoughts

The SBA's new lending rules present both challenges and opportunities for veterans looking to buy a business. By understanding these changes and preparing accordingly, you can position yourself for success in your entrepreneurial journey.

Join us on May 28th to gain the insights and tools you need to navigate this new landscape confidently.

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