When the new rules apply to your deal
The SBA published SOP 50 10 8.1 on August 14, 2026, and it took effect October 1, 2026 [1]. It applies to every 7(a) and 504 application that is issued an SBA loan number on or after that date. Lenders must keep using SOP 50 10 8.0 for applications submitted through September 30, 2026 [1].
The SBA says the update builds on the lending criteria reintroduced in SOP 50 10 8.0, moves change of ownership lending into a new Appendix 15, and adds new flexibility for SBA Express and same-institution debt refinancing [1]. If your lender has your file but has not yet pulled an SBA loan number, ask which version your deal will follow.
The four deal types, and which one you are
Appendix 15 sorts every change of ownership into one of four categories: Initial Acquisition, Business Expansion, Owner Buyout, and ESOP and Cooperative [2]. The category sets your equity rule and some of the paperwork.
An Initial Acquisition is a deal that makes someone the new majority or largest owner who did not own part of the business before, or who has worked there fewer than 24 months [2]. A first-time buyer of a New Jersey shop, practice or route business usually falls here.
| Deal type | Minimum equity | Can the lender lower it? |
|---|---|---|
| Initial Acquisition | 10% | No |
| Business Expansion | 10% | Yes, if liquidity and working capital are strong |
| Owner Buyout | 10% of the purchase price | Yes, if liquidity and working capital are strong |
| ESOP buying 51% or more | No SBA equity requirement | Not applicable |
How the 10% is measured, and where a seller note fits
For most deal types, the SBA measures equity against total project cost: everything needed to become operational, whatever the source of the money, except lines of credit and 504 loans [2]. For an Owner Buyout, it is measured against the purchase price in the purchase agreement [2].
A worked example (our calculation)
You buy a business for $1,200,000 and need $100,000 of working capital to run it. Total project cost is $1,300,000. As an Initial Acquisition, your minimum equity is 10%, or $130,000, and the lender cannot waive it.
A seller note can help. Seller debt that is subordinated to the lender and on full standby, meaning no principal or interest payments for the term of the 7(a) loan, may be counted as equity [2]. Under SOP 50 10 8.0, standby seller debt could cover no more than half of the required equity [3]; the 8.1 Appendix 15 text does not repeat that limit [2], so ask your lender how it applies the rule. The SOP also lets seller debt from the deal be refinanced once it has been in place and current for 36 months [2].
Seller transition, quality of earnings, and valuation
The seller can now stay on longer. If a transition period is needed, the business may hire the seller as a consultant for up to 24 months in total, including extensions [2]. Under 8.0, the limit was 12 months [3]. For a business that runs on the owner's relationships, that extra year can matter.
Bigger deals need more proof. When the purchase price is $3 million or more, the lender must get a quality of earnings report in addition to the business valuation, with the $3 million measured before buyer equity or seller debt [2]. The report must document every add-back and adjustment to the seller's reported earnings [2], and if the adjusted cash flow does not support the price, the loan amount must come down [2].
One limit applies to every deal: total debt supporting the purchase, including seller debt that is not on full standby, cannot exceed the business valuation and must be covered by the buyer's cash flow [2].
If the seller keeps a small stake
Partial sales come with a new string. A selling owner who takes loan proceeds and keeps a direct or indirect stake under 20% must give a full guaranty of the loan [2], and that guaranty must last at least two years after final disbursement [2]. Sellers who plan to keep a sliver of ownership should know this before signing a letter of intent.
If you are early in a deal, our guide to SBA loans for buying a business covers the full process, and the SBA loan calculator shows payments at today's rates. Batch Capital can check whether your deal fits a 7(a) or a different structure.