# Understanding the Small Business Administration’s Updated SOP: A Beginner’s Guide
The Small Business Administration (SBA) recently announced significant changes to the Standard Operating Procedures (SOP), aimed at making it easier for small businesses to access capital. These changes include increased loan sizes, reduced paperwork, and simpler standards for acquisitions.
## What are the Changes in the Updated SOP?
### 1. Bigger Loan Amounts
– The SBA has increased the limit for 7(a) small business loans to $500,000, up from $350,000.
– Small loans now have fewer requirements, potentially expanding lending opportunities for small business owners.
### 2. Less Paperwork
– Lenders are no longer required to analyze three years’ worth of business tax returns and full guarantor analysis, streamlining the underwriting process.
### 3. Reduced Fees
– Lenders are now required to charge a fixed fee of up to $2,500 per loan, providing a more predictable cost structure for borrowers.
### 4. Simpler Standards for Acquisitions
– Small businesses can now use SBA loans to buy partial stakes in a business, making acquisitions more accessible.
### 5. Insurance up to the Lender
– The SBA has relaxed insurance requirements, giving individual lenders more control over their specific insurance requirements.
### 6. Changes for Startups
– Startups no longer need to invest ten percent of the business into their startup to qualify for SBA loans, making it easier for new businesses to access funding.
### 7. Affiliation Tests
– The SBA has introduced affiliation tests to determine if a business is small and qualifies for an SBA loan, providing clarity for both lenders and borrowers.
### 8. Addressing Funding Gaps
– The updated SOPs aim to reduce capital access gaps for rural, veteran, women, and minority-owned businesses, making it easier for these communities to apply for and receive SBA loans.
## How Do These Changes Impact Small Businesses?
The changes in the updated SOP are designed to benefit small business owners in several ways:
– **Easier Access to Capital**: The increased loan amounts and reduced paperwork make it easier for small businesses to qualify for and receive SBA loans.
– **Simplified Processes**: The streamlined underwriting processes and reduced fees save time and money for both lenders and borrowers.
– **Inclusivity**: The changes address long-standing capital access gaps for underserved communities, ensuring that all small businesses have equal opportunities to access capital.
## How to Get Started with SBA Loans
If you believe that an SBA loan is the right funding solution for your small business, you can get started with SmartBiz®. Our simple, online application process allows you to know if you pre-qualify in five minutes or less. Our team of experts will guide you through the process, ensuring that you are matched with the right funding solution for your business.
Apply today and take advantage of the updated SOP to access the capital you need to grow and succeed.
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