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The SBA has finalized a standard operating procedure (SOP) update relating to equity requirements for 7(a) loans from 25% to 10%, beginning on January 1, 2018. This reduction in the equity requirements will open up the program to many more small business borrowers, and may spur small business growth around the country. Though it remains to be seen how the lenders themselves will respond to the lower equity requirements, this will potentially provide greater flexibility and more lending for small businesses who work with the SBA.
The SBA 7(a) loan program is the agency's most popular program, providing loans of up to $5 million to fund startup costs, including purchasing new land (including construction costs), purchase or expand an existing business, and refinance existing debt. NAR Commercial members frequently work with small businesses as clients, and according to NAR's Commercial Real Estate Lending Trends 2017 report, 6% worked with the SBA loan programs and 16% used the SBA refinance program. NAR frequently collaborates with the SBA to provide feedback on lending programs and raise awareness among REALTORS® of the options the agency provides.
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