SOP 50 10 8.1 and Information Notice 5000-882227: Where SBA Still Lends on Projections, and the Forecast Evidence It Now Requires

Current as of October 28, 2026. Covers SBA SOP 50 10 8.1 with Technical Policy Updates (effective October 1, 2026), Information Notice 5000-882227 (September 25, 2026), Information Notice 5000-880695 (August 14, 2026), and SBA guidance given on the October 20, 2026 lender call.

The common summary of SOP 50 10 8.1 is that SBA stopped lending on projections. For most 7(a) acquisitions, that is correct. For start-ups, new businesses, construction projects, 504 projects without enough history, acquisitions with no continuity of operations, and owner-occupied special-purpose property, it is wrong. In those files the projection is still the credit decision, and the question is no longer whether a forecast exists. It is whether the forecast can be reconciled to history, benchmarked against comparable outcomes, and trusted to reach the required coverage inside a fixed window. This page sets out what changed, which loans the new SOP governs, every place projections still decide credit, and the forecast evidence a lender should expect to see.

The short answer

Question	Answer	Source grade
Which version is in force?	SOP 50 10 8.1 with Technical Policy Updates, file "SOP 50 10 8.1 Technical Policy Updates effective 10.1.2026.docx" (1,072 KB)	Verified: SBA SOP 50 10 landing page, updated October 7, 2026
Which notices issued it?	Information Notice 5000-880695 (August 14, 2026) issued the original 8.1; Information Notice 5000-882227, "Issuance of Technical Updates to SOP 50 10 8.1" (September 25, 2026) reissued it before it took effect	Verified: SBA notice landing pages
Effective date	October 1, 2026	Verified
Which files does it govern?	Disputed between "applications received by SBA on or after October 1" and "loans receiving SBA loan numbers on or after October 1." Files submitted through September 30 stay on SOP 50 10 8 under both readings	Secondary; see "Which loans 8.1 governs"
Acquisition coverage	1.25x on historical or adjusted earnings for Initial Acquisitions, Owner Buyouts and ESOP or cooperative transactions; 1.15x for Business Expansions	Secondary (lender counsel and trade summaries of Appendix 15)
Can projections still support credit?	Yes, for start-ups and new businesses, non-acquisition 7(a) Small loans, construction, 504 projects with insufficient history, acquisitions with no continuity of operations, and the owner-occupied special-purpose exception	Secondary
Quality of Earnings	Required for Initial Acquisitions and Business Expansions at a Business Purchase Price of $3 million or more, measured net of owner-occupied real estate	Secondary
Lender's own business valuation	Permitted when the Business Purchase Price is $350,000 or less and buyer and seller are not closely related	Secondary
25-year acquisition amortization	Only for owner-occupied special-purpose property integral to the business, with real estate at least 85% of total project costs	Secondary; restated orally by SBA on October 20, 2026
Does 8.1 require a feasibility study?	No blanket requirement. SBA may request one on 504 projects in five listed circumstances, and lenders may require one under their own credit policy	Secondary transcription of Section C

How to read the source grades. We verified titles, dates, file names and effective dates directly from SBA's posted notice and SOP pages. The substantive rules in this page are drawn from lender counsel, trade association and CDC transcriptions of the SOP text and the notices, and from Coleman Report's account of SBA's October 20 lender call. Where those sources conflict, we say so. Any rule a specific file depends on should be confirmed against the SOP document and the redline SBA posted with Notice 5000-882227.

The claim, and what it gets wrong

"SBA stopped lending on projections" became the shorthand for SOP 50 10 8.1 within a week of its release, and it describes the headline change accurately. Under SOP 50 10 8, a buyer could clear a 1.15x coverage test using projected cash flow. Under Appendix 15 of SOP 50 10 8.1, most acquisitions must clear 1.25x on the seller's actual or adjusted historical earnings, and projections may be reviewed but may not be used to meet the ratio.

The shorthand fails in two ways. First, it treats acquisitions as the whole program. In FY2023, according to SBA's own approvals report, start-ups received 19% of 7(a) dollars ($5.20 billion) and new businesses of two years or less received another 18% ($4.93 billion). Changes of ownership received 20%. Start-ups received 15% of 504 dollars. Roughly a third or more of 7(a) dollars go to borrowers whose coverage test is necessarily projection-based, and 8.1 did not change that.

Second, it misses the acquisitions where projections survive. A narrow exception allows projections to meet the coverage ratio for owner-occupied special-purpose property that fully secures the loan, provided coverage is reached within two years of funding. And practitioner readings of the technical update note that where an acquired business will not continue the seller's operations, the lender may evaluate the transaction as a start-up.

In every one of these files, the SOP assumes a projection exists. What separates an approvable file from a declined one, and a performing loan from an early default, is whether the projection deserves to be believed. That is the subject of this page.

What Information Notice 5000-882227 changed

SBA published SOP 50 10 8.1 on August 14, 2026. Six weeks later, and six days before the effective date, it reissued the SOP with technical policy updates under Information Notice 5000-882227 and posted a redline comparing the two texts. NAGGL advised lenders that the September version supersedes the August text, which never took effect, and recommended destroying saved copies of the earlier version. Many summaries written in August still describe rules the September update reversed.

The changes below follow Coleman Report's September 28 summary of the notice. Page references follow practitioner citations of the notice's pages one to three.

#	Change identified in Notice 5000-882227	Practical effect
1	7(a) Small and SBA Express may finance changes of ownership under Appendix 15, with no reduced coverage test	Reverses the August text, which barred them
2	The lender may perform its own business valuation when the Business Purchase Price is $350,000 or less, unless buyer and seller are closely related	Restores internal valuation for small deals
3	Working-capital adjustments in the purchase agreement are not treated as seller rebates and may be treated as cash to the borrower	Fixes a common closing problem
4	A single acquisition loan may amortize beyond ten years, up to 25, when acquiring both the business and an owner-occupied special-purpose property whose value is substantially dependent on the business	Restores long amortization for qualifying special-purpose acquisitions
5	A Quality of Earnings report previously prepared for the applicant may be used with a reliance letter or a secondary review by another firm; it may not be prepared by or for the seller	See the QoE section; the SOP text is stricter
6	Mixed-purpose 7(a) loans may use a blended maturity; at least 51% of proceeds for real estate allows up to 25 years outside acquisitions	Clarifies Appendix 17
7	504: the prohibition on a third-party loan amortizing beyond the debenture term is removed	Restores structuring flexibility
8	504: third-party lender underwriting analysis may be submitted directly to the Sacramento Loan Processing Center on projects of $5 million or more	New file path
9	Collateral language from SOP 50 10 8 is reinstated	Reverses August changes
10	Working Capital CAPLine annual field examinations begin at $1 million (previously "over $1,000,000")	Exactly $1 million is now included
11	Trusts: an unlimited guaranty is required where one or more trusts own 20% or more in aggregate; the trustor must also guarantee; all trust donors are deemed trustors for eligibility	Narrower trigger, broader trustor coverage

The redline also contains changes the notice does not list. NAGGL flagged that, despite the general limit on working capital in changes of ownership, the lender may disburse a de minimis amount of proceeds for incidental post-approval adjustments; Starfield & Smith reports the cap as the greater of $10,000 or 0.5% of the loan. Starfield & Smith also reports that verification of an acquired business segment moved from "may" to "must" use third-party sources where transcripts do not identify it; that EV charging stations and stand-alone passively operated businesses are ineligible; that buyers employed fewer than 24 months are treated as making an Initial Acquisition; that for delegated lenders the business valuation and any Quality of Earnings report must be formally engaged when the SBA loan number is issued; and that agent fees and education or advisory costs do not count toward the equity injection.

Which loans 8.1 governs

The transition rule is the most practically urgent question in the new SOP, and it is still unsettled in writing.

Source	Reported wording	Date
Information Notice 5000-880695	Applies to applications "issued an SBA loan number on or after" October 1, 2026; SOP 50 10 8 continues for applications submitted through September 30	August 14, 2026
Information Notice 5000-882227, as quoted by StatementsReady and Coleman Report	Applies to applications "received by SBA" on or after October 1; applications submitted through September 30 remain under SOP 50 10 8	September 25, 2026
NAGGL	"effective for loans receiving SBA loan numbers on or after October 1, 2026"	September 25, 2026

For delegated (PLP) lenders, the two readings usually coincide, because SBA treats an application as received when it is assigned a loan number. SBA used the same logic when it issued SOP 50 10 7 under Notice 5000-847027, which tied the receipt date for variable-rate loans to the date the loan was approved and assigned a number. The readings diverge for non-delegated files that SBA received on or before September 30 but numbered later. Under the receipt reading those files stay on SOP 50 10 8; under a literal loan-number reading they move to 8.1. Both notices agree that files submitted through September 30 stay on SOP 50 10 8, which supports the receipt reading.

Two cautions apply. The closing or disbursement date is not the test under either reading. And FY2027 guaranty fees follow a different trigger: they are reported to apply to 7(a) loans approved from October 1, 2026. We found no written SBA clarification of the transition rule as of October 28, 2026. For any file that straddles the change, obtain the lender's position, and where necessary the processing center's, in writing.

SOP 50 10 8 versus SOP 50 10 8.1: the full change log

The table consolidates the changes reported across the notice, the redline and practitioner readings of Appendices 14 to 19. Appendix 15, "Changes of Ownership," now governs acquisitions and overrides conflicting text elsewhere in the SOP.

Provision	SOP 50 10 8	SOP 50 10 8.1 with Technical Policy Updates	Effect
Acquisition categories	No formal categories	Initial Acquisition (the default), Business Expansion, Owner Buyout, ESOP and Cooperative	The category sets coverage, equity and diligence
Initial Acquisition definition	Not applicable	A change of ownership producing a new majority or largest owner who was not previously an owner, or a buyer employed fewer than 24 months (as quoted by Starfield & Smith)	Short-tenure employees are treated as new buyers
Business Expansion	Not applicable	Applicant with two full fiscal years under current ownership buying 100% of a business in the same four-digit NAICS group, with the same or greater number of full guarantors	A separate, lower coverage test
Owner Buyout	Not applicable	At least one original owner stays and guarantees; individuals employed fewer than 24 months may acquire less than 50% and may not become the largest shareholder	Failing the test reclassifies the deal as an Initial Acquisition
Coverage	1.15x on historical and/or projected cash flow, with projections reaching 1.15x within two years	1.25x for Initial Acquisition, Owner Buyout and ESOP or cooperative; 1.15x for Business Expansion; historical or adjusted only, except the special-purpose exception	Acquisitions price on trailing earnings
Equity injection	10% for changes of ownership	Initial Acquisition: 10% of total project costs plus other uses, cannot be reduced or eliminated; Owner Buyout and Business Expansion: 10%, lender may reduce or waive (Owner Buyout measured on purchase price); ESOP acquiring 51% or more: exempt; cooperatives: 10%, not waivable	Equity on Initial Acquisitions can no longer be waived
Limited equity sources	Standby seller note up to 50% of the injection	Seller debt on full standby, other standby debt and non-controlling minority investors (under 20%, no control) together may provide no more than half the required injection	The 50% cap is now shared
Seller notes	Full standby counts toward equity	Still counts as a limited source; non-standby notes count in debt service; interest-only notes tested on a ten-year or shorter amortization	Seller paper still works, within the cap
Seller note refinancing	After 24 months	After 36 months in place and current	Longer seasoning
Seller consulting	Up to 12 months	Up to 24 months (Initial Acquisition and Business Expansion)	Longer transition
Earnouts	Not addressed	Seller earnouts prohibited; buyer performance rebates allowed, applied to the loan	Earnouts must be restructured
Quality of Earnings	Not required	Required for Initial Acquisition and Business Expansion at a Business Purchase Price of $3 million or more, before equity and seller financing, excluding owner-occupied real estate; cash proof covering the trailing twelve months and two fiscal years	New diligence cost and timing
Business valuation	Lender's own valuation if financing less appraised real estate and equipment was $250,000 or less	Lender's own valuation if Business Purchase Price is $350,000 or less and parties are not closely related; otherwise independent and prepared for the lender; any price above value must be equity	Both the threshold and its basis changed
Working capital	Not addressed	Purchase-agreement true-ups may be cash to the borrower; de minimis disbursement up to the greater of $10,000 or 0.5%	Fixes closing mechanics
Maturity	51% or more of proceeds for real estate allowed up to 25 years, including acquisitions	The 51% rule excludes acquisitions; business portion generally amortizes over ten years; real estate separate or blended; 85% special-purpose exception allows up to 25 years on a single loan	Amortization is now the largest lever in acquisition sizing
Base rates (Appendix 18)	Prime and existing bases	Adds SOFR and five- and ten-year Treasury bases, still capped at prime plus the size spread	More index choices, same caps
Collateral (Appendix 19)	SOP 50 10 8 language	August changes reversed; SOP 50 10 8 language reinstated	Back to prior rules
7(a) Small	SBSS score requirement sunset March 1, 2026	Commercial credit analysis using the two most recent months of bank statements; 1.10x for non-acquisition loans; acquisitions allowed under Appendix 15 ratios	Bank-statement analysis replaces the score
SBA Express	Not available for acquisitions in the August text	May finance changes of ownership under Appendix 15	Reversal
Citizenship and residency	Policy Notice 5000-876441, effective March 1, 2026	Incorporated: owners must be U.S. citizens or nationals with principal residence in the U.S.; lawful permanent residents reported ineligible	Ownership screening comes first
Personal financial statements	Within 120 days of submission	Within 90 days for owners of 20% or more and guarantors; business statements remain 120 days	More frequent refreshes; SBA Form 413 still shows 120 days
504 third-party loan underwriting	Commitment or term sheet	On projects of $5 million or more, the third-party lender's credit memorandum or underwriting analysis goes to the processing center	New file requirement
Combined capacity	7(a) balance reduced 504 availability	A 7(a) balance no longer reduces 504 availability; up to $5 million under each program (Policy Notice 5000-879058, effective July 4, 2026)	Larger stacked structures

Coverage requirements by program and transaction

See the SBA and USDA DSCR methodology and SBA DSCR calculator for the related calculation framework.

Program or transaction	Minimum coverage	Basis	When projected coverage must be met
Standard 7(a) over $350,000, not an acquisition	1.15x business; 1.0x global	Historical and/or projected	Within two years of funding, or after construction ends
7(a) Small, not an acquisition	1.10x	Historical or projected	Within one year
7(a) Initial Acquisition, Owner Buyout, ESOP or cooperative	1.25x	EBITDA divided by combined post-transaction debt service; last fiscal year or two-year average; historical or adjusted	Projections may not be used
7(a) Business Expansion	1.15x	Same	Projections may not be used
7(a) Small and Express acquisitions	The Appendix 15 ratio for the category	Same; no reduced test	Projections may not be used
Owner-occupied special-purpose acquisition	The category ratio	Projections permitted if the property fully secures the loan	Within two years of funding, or after construction ends
504	1.15x	Historical (last fiscal year or two-year average); projections of at least two years where history is insufficient; outside income not added to business cash flow	Year two permitted, with liquidity to cover a first-year shortfall

Lender policies frequently exceed these minimums. A lender's internal 1.30x or 1.35x is a credit overlay, not an SBA rule, and it should be labeled that way in any analysis that relies on it.

Where projections still decide SBA credit

Our SBA feasibility study consultant service covers lender-grade forecast support; the SBA loan-program overview explains program structure.

Path	Coverage test	Window	What the forecast must carry	Indicative share of SBA lending
Standard 7(a) start-up or new business	1.15x business, 1.0x global	Two years from funding	The entire repayment case; start-ups require detailed projections with supporting assumptions	Start-ups 19% and new businesses 18% of 7(a) dollars in FY2023 (SBA approvals report)
7(a) Small, not an acquisition	1.10x	One year	Repayment, supported by two months of bank activity	About two-thirds of 7(a) loans by count are $350,000 or less; the projection-dependent share is not reported
Construction	Standard ratio	Two years after construction ends	Lease-up or ramp after completion, plus carry during construction	Not separable in public loan data
504 with insufficient history	1.15x	Year two, with first-year shortfall covered by liquidity	Two or more years of projections with justified assumptions	Start-ups were 15% of 504 dollars in FY2023
Acquisition with no continuity of operations	Start-up standards	Start-up window	The new operating plan, not the seller's history	Not measurable
Owner-occupied special-purpose exception	Category ratio (1.25x or 1.15x)	Two years from funding or after construction	The bridge from the seller's history to the buyer's plan, with variance support	Changes of ownership were 20% of 7(a) dollars in FY2023; the qualifying subset cannot be isolated

Every path in this table shares one feature: the SOP sets a target ratio and a deadline. A forecast that reaches 1.15x in year two on paper satisfies the underwriting test at approval. A forecast that reaches it in reality is what keeps the loan out of the early-default population that SBA's Inspector General keeps examining.

Why accuracy, not existence, decides these files

What the oversight record actually faults

SBA's Office of Inspector General has reviewed early-defaulted loans for more than a decade, and its findings do not concern missing projections. They concern projections nobody tested.

In Report 18-21 (August 15, 2018), a high-risk review of early-defaulted 7(a) loans, OIG examined a $1.2 million loan where, after net losses, the lender relied on projections that were unsupported. Net income before taxes was projected to rise from a loss of $221,815 to $594,897, nearly 30% of sales against an RMA industry average of 2.0%, and about 95% of the $2.0 million of projected sales could not be verified. In a $780,000 franchise loan, the lender projected first-year sales of $1.5 million against $1.4 million of actual sales at the sister unit. Recomputed on actual sales, coverage the lender had put at 1.98x fell to 1.03x, below the required 1.15x. OIG questioned $1,351,565 across the cases.

Report 12-18 recommended a detailed repayment-ability analysis on high-dollar early-defaulted loans and estimated savings of at least $43 million. Report 26-14 (September 17, 2026) found that loans from small business lending companies approved between FY2016 and FY2023 defaulted at 14.87% against 9.79% for other lenders, with early defaults of 5.38% against 2.62%. That report concerns lender type rather than projections, but its finding that SBA's credit risk office did not sufficiently assess root causes points in the same direction: the agency's recurring problem is untested assumptions, not absent ones.

What bank examiners expect

The OCC's Comptroller's Handbook booklet on rating credit risk instructs examiners to analyze how projections vary from historical performance, and observes that borrowers who quickly or repeatedly fall short of their projections lack credibility. The commercial real estate lending booklet describes credible pro forma projections as a key determinant of a project's feasibility and directs examiners to compare lease-up against the underwriting pro forma. SBA lenders are examined against these expectations whether or not the SOP repeats them.

What the forecasting evidence shows

The research on forecast accuracy explains why a projection should never be accepted on its own terms. Bent Flyvbjerg's studies of large projects found average cost overruns of 44.7% for rail, 33.8% for bridges and tunnels and 20.4% for roads, and rail passenger forecasts that averaged 51.4% below plan, with 84% missing by more than 20% in either direction. Across 25 project types, mean overruns ranged from 1% to 238%. The remedy Flyvbjerg's work popularized, reference class forecasting, benchmarks a forecast against the actual outcomes of comparable projects rather than against the sponsor's plan; one documented application reduced average cost overruns from 38% to 5%.

Small-business forecasts are not infrastructure megaprojects, but the mechanism is the same. The person preparing the forecast has an interest in the answer, and the inside view of a single project systematically understates the variance that comparable projects actually experienced. Franchise systems illustrate it in miniature: about 86% of franchisors now include a financial performance representation in Item 19 of their disclosure document, and the FTC requires them to disclose how many outlets attained the stated results precisely because averages conceal dispersion.

What SBA's loan data can and cannot tell you

SBA's public loan-level files record a business-age field that distinguishes existing businesses, new businesses, start-ups and changes of ownership. The field is usable only from about FY2019, because SBA's approvals report shows no entries in any category for FY2018 and only 16 loans in the new-business category in FY2019, and SBA notes the fields are voluntary. Seasoned comparisons by business age are therefore not yet possible from public data. One broker's analysis of FY2020 to FY2025 loans reports default rates of 1.99% for new businesses, 1.43% for start-ups, 1.20% for existing businesses and 0.71% for changes of ownership, but these cohorts are young; the median charge-off arrives roughly four years after approval, so the figures understate eventual losses and are directional only.

The direction is nonetheless consistent with the oversight record: loans underwritten on plans rather than history default more often, and early. That is the population SOP 50 10 8.1 leaves on projections.

What "variance support" should mean

Practitioner readings of Appendix 15 list variance support among the conditions for the owner-occupied special-purpose projection exception, alongside history, two-year projections and the appraisal, collateral and valuation requirements. We have not found the operative wording quoted in any retrievable source, and SBA has not defined the term publicly. Until it does, the standard should come from the principles examiners and accountants already apply. This is the standard we apply in every projection-dependent study, and the one we recommend lenders require.

Start from verified history. Reconcile tax transcripts, financial statements and, where one exists, the Quality of Earnings cash proof. The forecast begins at the verified trailing twelve months, not at a broker's normalized figure.
Bridge every material variance to a documented driver. For each revenue and expense line that moves more than a stated threshold between history and projection, identify the driver (volume, price, mix, margin, cost) and the evidence behind it: signed contracts, a completed property improvement plan, comparable-unit actuals, market rate surveys. OIG faulted lenders for relying on verbal customer commitments and margins far above industry averages with no supporting analysis.
Benchmark against a reference class. Compare the projected ramp and margins with what comparable operations actually achieved: RMA ratios by industry, actual results of comparable units, franchisor Item 19 distributions read at the quartile rather than the mean, and competitive-set performance.
Run downside, breakeven and reference-class cases. Show coverage at the category ratio in each case. Report the breakeven revenue and the breakeven margin, and the coverage that results if the business performs at the reference-class median rather than the plan.
Tie liquidity to the coverage window. Where the plan reaches the required ratio only in year two, size the working capital or reserve that funds the shortfall until it does. For 504 files, this is reported to be an explicit SOP requirement.
Meet the professional standard for prospective information. The AICPA's guide for prospective financial information requires assumptions to be reasonable and suitably supported; an examination under AT-C 305 opines on whether they provide a reasonable basis. A feasibility study should be able to survive that test.
Build in a checkpoint. Present year-one and year-two milestones in a form the lender can compare against actual results after funding. A forecast that cannot be checked is not accountable.

An illustration

For the asset-specific evidence behind a hotel ramp, see our hotel feasibility study methodology.

The table shows the variance bridge for a hypothetical 90-room limited-service hotel acquired under the special-purpose exception, with a property improvement plan completing in month eight. Annual debt service is $600,000 and the Initial Acquisition ratio is 1.25x. The figures are illustrative.

Line	Trailing 12 months	Year 1	Year 2	Variance driver and evidence
Occupancy	61.0%	64.0%	66.0%	PIP completion; competitive-set occupancy 66.5%; brand reservation contribution for converted properties
Average daily rate	$118	$121	$124	Renovated-product premium; competitive-set ADR $127
Rooms revenue	$2,364,543	$2,543,904	$2,688,444	Year 2 is 13.7% above history
EBITDA margin	26.0%	28.0%	30.0%	Labor scheduling after renovation; franchise fee stack held constant
EBITDA	$614,781	$712,293	$806,533
Coverage at $600,000 debt service	1.02x	1.19x	1.34x	Plan reaches 1.25x in year two

Reference-class downside, year 2	Value
Occupancy at the comparable-conversion median	63.5%
Average daily rate	$121
Rooms revenue	$2,524,030
EBITDA at a 28% margin	$706,728
Coverage	1.18x
Annual shortfall to 1.25x	About $43,000

On its own terms the plan works. Against the reference class it does not reach the ratio inside the window. A file built this way gives the lender three choices it can defend: require a liquidity reserve sized to the shortfall, reduce the loan, or document why the subject should outperform the reference class. A file that presents only the plan column gives the lender none of them.

The acquisition math at current rates

The September 16, 2026 FOMC decision raised the federal funds target range to 3.75% to 4.00%, and the prime rate moved to 7.00%. At that prime, the SBA 7(a) variable-rate cap for loans above $350,000 is 10.00%. The October 2026 504 debenture priced at an effective 6.97% for both 20- and 25-year terms and 6.59% for ten years, according to the certified development companies that publish monthly pricing. The FOMC's October 27 to 28 meeting was in progress as this page was updated.

For a business with $500,000 of historical EBITDA, financed at 10.00% with monthly payments:

Scenario	Maximum annual debt service	Maximum loan	Implied price at 90% loan-to-cost
1.15x, ten-year amortization (the former standard test)	$434,783	About $2.74 million	About $3.05 million
1.25x, ten-year amortization (Appendix 15 Initial Acquisition)	$400,000	About $2.52 million	About $2.80 million
1.25x, 25-year amortization (qualifying special-purpose, real estate at least 85%)	$400,000	About $3.67 million	About $4.08 million

Moving from 1.15x to 1.25x costs about 8% of loan capacity. Qualifying for the 25-year special-purpose amortization adds about 45%. The simplification ignores global cash flow, guaranty fees, taxes, a replacement manager's salary and lender overlays, but the proportions hold: for a special-purpose acquisition, whether the real estate clears 85% of total project costs matters more than the coverage ratio itself. That share is set by the appraiser's allocation of value among land, building, equipment and intangible assets, so the appraisal and the feasibility study need to be reconciled before the loan is sized, not after.

The owner-occupied special-purpose exception, asset by asset

Compare the special-purpose property study guide with the underlying SOP 50 10 8.1 regulatory update.

SBA's special-purpose property list, reproduced by certified development companies, includes hotels and motels, gas stations, car washes, bowling alleys, golf courses, marinas, nursing homes including assisted living, and cold storage where more than half the space is refrigerated, among other uses. The list is illustrative, and lenders and appraisers apply it with judgment. Two separate benefits can attach to an owner-occupied special-purpose acquisition: the projection exception (projections may satisfy coverage within two years, if the property fully secures the loan) and the maturity exception (up to 25 years on a single loan, if real estate is at least 85% of total project costs). They are different tests, and a property can qualify for one and not the other.

Asset class	Special-purpose treatment	25-year single loan realistic?	Projection exception realistic?	Variance drivers a study must support
Hotels and motels	Named	Often, if FF&E, goodwill and PIP costs stay within 15% of project costs	Yes, if fully secured	Occupancy and ADR ramp, PIP timing, franchise fee stack
Gas stations and truck stops	Named (gas stations)	Possible; fuel equipment and inventory reduce the real estate share	Yes, if fully secured	Gallons and fuel margin, inside sales, card fees
Car washes	Named	Depends on how tunnel equipment is allocated	Yes, if fully secured	Membership ramp and churn, cars per day
RV parks and campgrounds	Treated as lodging by many lenders; transient-revenue eligibility test applies	Uncertain; CDC determination	Uncertain	Site occupancy, seasonality, transient share
Self-storage	Practice varies; some lenders and CDCs treat it as special purpose, published CDC lists do not name it	Likely if classified, given low business value	Only if classified	Lease-up pace, street rates, concessions
Assisted living and skilled nursing	Named	Possible; operating-business value can be large	Yes, if fully secured	Census ramp, payer mix, staffing cost
Bowling, golf, marinas	Named	Uncertain; land-heavy assets may qualify	Yes, if fully secured	Leagues and events, rounds and memberships, slip occupancy
Restaurants	Not named	Rarely; goodwill and FF&E are high	Only through the no-continuity start-up path	Covers, check average, prime cost
Childcare and fitness	Not named	No	Start-up path only	Enrollment or membership ramp, staffing ratios

Quality of Earnings: notice, SOP and the October 20 call

Source	What it reportedly says
Information Notice 5000-882227 (as summarized by Coleman Report)	A QoE report previously prepared for the applicant may be used if accompanied by a reliance letter or a secondary review by another firm; it may not be prepared by or for the seller
SOP 50 10 8.1 Appendix 15 (as transcribed by practitioners)	The QoE must be performed by an independent, experienced financial professional for the benefit of the lender; the lender may not rely on a report prepared by another party without a review performed by one of its vendors
SBA lender call, October 20, 2026 (as reported by Coleman Report on October 27)	SBA will accept buyer-obtained QoE reports if reviewed by the lender's selected QoE vendor; seller-prepared reports remain prohibited

The texts are reconcilable if read together. A reliance letter alone satisfies the notice but not the SOP. A review by a firm the lender has engaged satisfies both, and it is what SBA described on October 20. The safe course is a buyer-commissioned report reviewed by the lender's approved vendor, never a report prepared by or for the seller.

The QoE and the feasibility study answer different questions. The QoE tests whether historical earnings are real. The feasibility study tests whether the forward plan is achievable. In an acquisition under the special-purpose exception, both matter: the QoE establishes the starting point of the variance bridge, and the study supports every step away from it.

What SBA has said since October 1

As of October 28, 2026, we found no new SBA notice, FAQ, technical correction or revised application form. Until forms are updated, lenders must collect and retain the information and certifications required by the existing forms and the SOP. SBA's substantive guidance since the effective date was oral, delivered on its October 20 lender call and reported by Coleman Report on October 27:

Individuals who have not been employees for 24 months cannot become the largest shareholder in an employee buyout; transactions failing the test follow Initial Acquisition standards.
For qualifying owner buyouts, the equity injection is calculated on the business purchase price rather than total project costs.
Buyer-obtained QoE reports are acceptable if reviewed by the lender's selected vendor.
Sellers retaining less than 20% may be released from their guaranty after 24 months if the loan has been current for the preceding 12 months.
Where equity is reduced or waived for qualifying buyouts or expansions, no dedicated permanent working capital may be added within 90 days, and incidental proceeds are limited to the greater of $10,000 or 0.5% of the loan.
Nonborrowed cash gifts are unlimited equity sources; education, advisory and agent fees do not count as equity.
The 25-year special-purpose acquisition maturity requires real estate of at least 85% of total project costs and property integral to the business.
The 51% real estate rule remains for loans that are not acquisitions.
Upfront guaranty fees were calculated incorrectly on applications submitted October 1 to 15, 2026; SBA told lenders to continue closing while fees are corrected.

None of this has the status of a written notice, and it should be cited as SBA's oral guidance until SBA publishes it.

Does SOP 50 10 8.1 require a feasibility study?

No. The new SOP does not make independent feasibility studies mandatory for any class of 7(a) or 504 loan. Practitioner reviews of the DOCX report that the word "feasibility" appears only in the 504 credit-memorandum section, and that the passage is carried forward unchanged from SOP 50 10 8. As transcribed, it describes independent studies and reports, including feasibility studies, hospitality facility assessments, energy audits and franchise assessments, as potentially beneficial in mitigating weaknesses identified in the credit analysis. It states that SBA has the authority to request a feasibility study when needed to understand the business type and market conditions at the project location, and lists five circumstances that may cause SBA to request one:

Market saturation by industry type and location.
A unique market concept.
Highly specialized project property.
A project disproportionate to the size of the community it will serve.
Significant rapid growth of the applicant or affiliate group with a corresponding increase in undisbursed or unseasoned debt.

The underlying regulation, 13 CFR 120.160(b), allows SBA to require professional appraisals, a survey or a feasibility study. It is discretionary. No 7(a) provision requiring a study was located.

In practice, the requirement comes from lenders. A lender asked to rely on projections for a start-up, a construction project, a 504 project without history or an owner-occupied special-purpose acquisition needs independent support for those projections, and its credit policy often says so. After October 1, the files where that support matters are fewer in number but higher in stakes: they are the files where a forecast still carries the coverage test, inside a window the SOP fixes.

Misconceptions still circulating

Claim	Position under SOP 50 10 8.1 with Technical Policy Updates
7(a) Small and Express cannot finance acquisitions	True only of the August text. The September update permits both under Appendix 15, at the Appendix 15 ratios
Every acquisition needs an independent business valuation	The lender may value the business itself when the Business Purchase Price is $350,000 or less and the parties are not closely related
8.1 applies by closing date	Neither reading uses the closing date; the dispute is between SBA receipt and loan-number assignment
Projections can never be used in an acquisition	They can under the owner-occupied special-purpose exception, and acquisitions with no continuity of operations may be underwritten as start-ups
Every special-purpose acquisition gets 25 years	Only where real estate is at least 85% of total project costs and the property is integral to the business
The 51% real estate rule was eliminated	Eliminated for acquisitions only; it remains for other mixed-purpose 7(a) loans
Seller notes no longer count toward equity	A full-standby seller note still counts, capped together with other standby debt and minority investors at half the injection
The 10% injection applies to every change of ownership	It cannot be reduced for Initial Acquisitions; it may be reduced or waived for Owner Buyouts and Business Expansions; ESOPs acquiring 51% or more are exempt
The QoE must be ordered by the lender	A buyer-commissioned report is acceptable if the lender's vendor reviews it
The QoE threshold includes real estate	The $3 million Business Purchase Price is measured excluding owner-occupied real estate
SBA requires 1.25x global coverage	Global coverage for standard 7(a) is 1.0x; 1.25x is the Appendix 15 business test for specific categories
8.1 requires feasibility studies	It does not; SBA may request one on 504 projects in five circumstances, and lenders may require one

A checklist for files that rely on projections

Use the borrower document checklist to assemble the evidence and our feasibility study methodology to frame the analysis.

Item	Confirm
Governing SOP	Receipt date and loan-number date recorded; lender's transition position documented
Transaction path	Start-up, new business, 7(a) Small, construction, 504, no-continuity acquisition or special-purpose exception identified, with the applicable ratio and window
Special-purpose status	Classification confirmed with the lender or CDC; full collateral coverage documented for the projection exception
85% test	Appraiser's allocation of land, building, equipment and intangibles reconciled to total project costs before the loan is sized
Verified history	Tax transcripts, statements and any QoE cash proof reconciled to the forecast's starting point
Variance bridge	Every material line change tied to a documented driver
Reference class	Ramp and margins benchmarked against comparable outcomes, at the median as well as the plan
Stress cases	Downside, breakeven and reference-class coverage reported at the category ratio
Liquidity	Reserve or working capital sized to any shortfall before the ratio is reached
Equity	Limited sources within half the injection; agent and advisory fees excluded; gifts documented
Checkpoint	Year-one and year-two milestones stated in a form the lender can compare with actual results

Questions lenders and borrowers ask

What is Information Notice 5000-882227? It is the SBA notice titled "Issuance of Technical Updates to SOP 50 10 8.1," published September 25, 2026 and effective October 1, 2026. It reissued SOP 50 10 8.1 with technical policy updates before the August version took effect, and SBA posted a redline comparing the two.

Which version of SOP 50 10 8.1 should I use? The version titled "SOP 50 10 8.1 Technical Policy Updates effective 10.1.2026," posted on SBA's SOP 50 10 page. The August text never took effect.

Does SOP 50 10 8.1 apply to my loan? It applies to files on the October side of the transition. The notices are read differently on whether the test is SBA receipt or loan-number assignment; files submitted through September 30 remain under SOP 50 10 8 under either reading. Confirm a straddling file's treatment with the lender in writing.

Can I still use projections to qualify for an SBA loan? For a start-up, a new business, a construction project, a non-acquisition 7(a) Small loan or a 504 project without enough history, yes, within the SOP's coverage windows. For most acquisitions, no: coverage is tested on historical or adjusted earnings. The exceptions are owner-occupied special-purpose property that fully secures the loan, and acquisitions with no continuity of operations that the lender underwrites as start-ups.

What does the special-purpose exception require? Practitioner readings describe owner-occupied special-purpose property integral to the business, a loan fully secured by the property, analysis of history, two-year projections with variance support, and the appraisal, collateral and valuation requirements, with the ratio met within two years of funding or after construction. The 25-year maturity is a separate test requiring real estate of at least 85% of total project costs.

What counts as variance support? SBA has not defined it publicly. We recommend a bridge from verified history to the projection, with every material change tied to documented evidence, benchmarked against comparable outcomes, stress-tested at the category ratio, and backed by liquidity sized to any shortfall.

How much less can a buyer borrow under 1.25x? Compared with a 1.15x test on the same historical earnings and terms, about 8% less. The amortization term matters more: at 10.00%, 25-year amortization supports about 45% more debt than ten years on the same cash flow.

Is a buyer's own Quality of Earnings report acceptable? Yes, if reviewed by a vendor the lender has engaged, as SBA described on its October 20 call. A reliance letter alone may not satisfy the SOP text, and seller-prepared reports are prohibited.

Does SBA require a feasibility study under 8.1? No. SBA may request one on 504 projects in five listed circumstances, and lenders frequently require one where projections carry the coverage test.

How did SBA lending perform in FY2026? Coleman Report reported FY2026 7(a) approvals of $32.43 billion on 56,130 loans, down 13% by dollars and 28.1% by count from a record FY2025. American Banker reported 504 volume down 9% to $7.1 billion. The October 2025 government shutdown and SOP 50 10 8's tighter rules both contributed, so the FY2026 decline cannot be attributed to any single change.

How this page was prepared

We read every SBA landing page cited here and verified the notice titles, dates, file names and effective dates against them. SBA posts the SOP as a Word document and the notices as PDFs; the substantive provisions summarized on this page were cross-checked across lender counsel, trade association, CDC and practitioner transcriptions of those documents, and conflicts are shown rather than resolved silently. SBA's October 20 guidance is reported as relayed by Coleman Report. We update this page when SBA publishes a notice, FAQ or form revision affecting SOP 50 10 8.1, and after each monthly 504 debenture sale.

This page is general information about SBA policy and feasibility analysis. It is not legal, accounting or credit advice, and it is not an SBA determination. Confirm the provisions that govern a specific transaction with the lender, the CDC or SBA against the operative SOP text and any later notices.