SOP 50 10 8.1 and the SBA feasibility study.

The document, the date and the timestamp

SOP 50 10 8.1 was issued on August 14, 2026 under Information Notice 5000-880695. It is the second rewrite of the 7(a) and 504 origination standard in fourteen months. SOP 50 10 8 took effect on June 1, 2025 and restored the underwriting discipline that the "do what you do" era had let go: a fixed equity matrix, a $50,000 collateral threshold, tax transcripts on every loan, the Franchise Directory, and a 7(a) Small ceiling of $350,000. 8.1 keeps all of that. It adds seven appendices numbered 14 through 20 that consolidate rules previously scattered across the document and across a year of notices, and it concentrates its substantive changes in two of them: Appendix 14 on refinancing and Appendix 15 on changes of ownership.

Three facts about the issuance decide how a deal in diligence today should be handled.

The effective-date test is the loan-number date. An application that receives its SBA loan number in E-Tran on or before September 30, 2026 is underwritten under Version 8. One numbered on or after October 1 is underwritten under 8.1. For a lender with delegated authority, issuing the number is a step the lender controls, which turns the effective date into a timestamp rather than a calendar cut-off. A file submitted on September 25 that does not clear E-Tran until October 2 is an 8.1 file, whatever the engagement letter or the purchase agreement says.

The document exists only as a Word file. SBA posts 8.1 as a .docx with no PDF and no paginated web version, and instructs readers to open it and use the Navigation Pane. Nothing on this page cites a page number, because no stable page number exists; references are to the internal headings, chiefly Appendix 15.

The transition will not run into a shutdown. Congress passed a continuing resolution in early September funding the government through December 11, 2026, so E-Tran stays open across October 1. That is the difference from last year, when a 43-day shutdown that began on October 1, 2025 froze new loan numbers after lenders had pulled roughly $1.7 billion of volume into September to get ahead of it. Any September rush this year is about being grandfathered under the more favorable Version 8, not about beating an outage.

One operational gap remains. SBA has said it is revising Forms 1919 and 1244 to correspond with 8.1 and that, until revised forms issue, lenders must collect the information and certifications required by the existing forms and by 8.1 and retain them in the file. The substantive rules bind on October 1 whether or not the paperwork does.

Appendix 15: the four boxes and what each one costs

Under Version 8, a change of ownership was one category with carve-outs. Under 8.1 every acquisition is assigned to one of four categories, and the category decides the equity requirement, the coverage floor, the diligence requirement and the processing path. The assignment is coded in the SBA loan system where the agency's oversight function reads it. Initial Acquisition is the default and the most demanding box; the lender must document in the credit memorandum how the applicant qualifies for anything else. Where any other part of the SOP conflicts with Appendix 15, Appendix 15 governs.

Two rules run across all four. The 7(a) Small streamlined path is closed to changes of ownership at any size: "The use of 7(a) Small loans is not permitted for change of ownership transactions." A $300,000 acquisition now gets full Standard 7(a) underwriting. And the old shortcut to a 25-year maturity where real estate was 51 percent or more of proceeds is replaced by a blended weighted-average maturity. Two seller-side terms moved in the borrower's favor: a seller may consult for up to 24 months in aggregate, up from 12, and a seller note becomes eligible for refinancing after 36 months in place and current, up from 24.

The equity rules, in the SOP's words

The provision that has drawn the most reaction is the one that sorts injection sources into two buckets. Unlimited sources are unborrowed cash, whether on the business's balance sheet or from elsewhere; cash from a personal loan to a guarantor "where repayment can be demonstrated to come from a source other than the cash flow of the business," with the SOP adding that the salary the business pays the owner does not qualify; and grants with no repayment or clawback feature during the loan term. Limited sources are standby debt, seller debt on full standby and, for the first time, equity from non-controlling minority investors, and "the following sources, whether individually or in the aggregate, may provide no more than half of the required Equity Injection."

A Non-controlling Minority Equity Investor "must have less than 20% equity in and exert no control over the operating business," with ownership aggregated across direct and indirect holdings. Distributions to that investor are prohibited until the 7(a) loan is repaid except for amounts "made solely for the purpose of satisfying the investor's tax obligations attributable to the business's income." Standby debt qualifies only on full standby, meaning no payments of principal or interest for the term of the 7(a) loan, and "the provider of standby debt may not take an equity investment in the business."

On a $2.5 million project the required injection is $250,000. Limited sources are capped at $125,000. The other $125,000 must come from unlimited sources, which for a first-time buyer means their own cash. Under Version 8 a self-funded searcher could contribute $50,000 personally and raise $200,000 from passive investors, because investor equity was uncapped. Under 8.1 that structure fails on its face. The workaround the market has converged on is to satisfy the required injection with unlimited sources plus at most half from limited sources, and to raise investor capital above the required injection where the cap and the distribution lock do not attach.

One further sentence deserves more attention than it has received. Where the purchase price exceeds the value supported by the business valuation and the Quality of Earnings report, additional limited sources may fund the gap, but "any additional funds provided must be on full standby." Read with the rule that total 7(a) debt is capped at the appraised business value, the third-party reports no longer merely inform the price. They set the ceiling on what guaranteed debt may fund and push the excess into equity or standby paper.

The coverage test

For Initial Acquisitions, Owner Buyouts and ESOP transactions the floor is 1.25x, measured on "either the last fiscal year-end or an average of the last two fiscal year-end statements on either a historical or adjusted basis." Business Expansions stay at 1.15x. Coverage is EBITDA divided by combined post-transaction debt service, with a rent add-back where owner-occupied real estate is acquired. The denominator includes the new SBA loan, existing debt as it will be structured after closing, and seller debt that is not on full standby; full-standby seller debt is excluded, consistent with its treatment as equity. Interest-only seller notes are underwritten on an amortization of no more than ten years so that a balloon cannot flatter the ratio. Projections are reviewed but may not be relied upon to clear the floor, and the historical ratio is coded in the loan system.

Where a Quality of Earnings report is required, its earnings figure must be used. If coverage on that figure does not support the price and structure, the SOP's instruction is to reduce the loan. It is not to find a projection that works.

The Quality of Earnings requirement, precisely

On an Initial Acquisition or Business Expansion, a Quality of Earnings report is required where the Business Purchase Price is $3,000,000 or more. The Business Purchase Price is the purchase-agreement price less the appraised value of any owner-occupied commercial real estate included in the deal. It is measured before the equity injection and before any seller note, "independent of total project costs, the application of Borrower equity, structuring of seller debt, or any other measure that would reduce the 7(a) loan amount." Owner Buyouts and ESOP transactions are exempt.

The report must be commissioned by and prepared for the lender. A report prepared by or for the borrower, the seller or a business broker does not satisfy the requirement, though a buyer's report with a reliance letter may be furnished for the lender's own professional to review. It must reconcile bank statements to the income statements and tax returns for the trailing twelve months and the last two fiscal years, document add-backs, and assess customer concentration and revenue sustainability. It names no required credential for the preparer. A Quality of Earnings report is a consulting engagement under AICPA CS Section 100, not an audit, review or attestation; the standard prescribes no procedures, no report content and no peer review of the deliverable. At $3 million the lender is buying a scope that nothing defines but the engagement letter. In the lower-middle-market band the reports run from roughly $15,000 at a boutique to $50,000 at a national firm, two to six weeks, which is 50 to 167 basis points on a $3 million loan.

What 8.1 did not change

The trade summaries have overstated the reach of this document, and the misstatements have a cost, because a lender who believes 8.1 rewrote the feasibility or appraisal rules will scope the wrong reports. The following carry forward from Version 8 without amendment.

The feasibility study framework. The codified basis remains 13 CFR 120.160(b), under which SBA may require a feasibility study, and the SOP leaves the decision to lender and CDC judgment. The five 504 triggers, market saturation, an unproven concept, a special-purpose property, a project disproportionate to the applicant's size, and rapid growth on unseasoned debt, are unchanged.

The appraisal, environmental, flood and construction machinery, including the going-concern appraisal on special-purpose property with its allocation of value to land, building, equipment and intangibles, the appraiser experience requirement, and the 504 construction contingency.

The special-purpose property list and the 504 equity surcharges that attach to it. Our special-purpose property guide sets the list out in full. On the asset classes this firm works in most, that list covers the majority of acquisitions.

The $5 million 7(a) maximum, the $350,000 7(a) Small ceiling itself, and the Franchise Directory. The per-borrower guaranty exposure of $3.75 million. The March 2026 citizenship and residency rules, which 8.1 consolidates rather than revises. The coordination of the 7(a) and 504 maximums that took effect on July 4, 2026 under Policy Notice 5000-879058, under which a borrower may access up to $5 million under each program concurrently.

And, most persistently misreported, the seller note. Seller debt "subordinated to the Lender and on full standby (no payments of principal or interest for the term of the 7(a) loan) may be considered as equity for SBA's purposes." The full-standby condition dates from Version 8 on June 1, 2025; it replaced the two-year standby that had been in place since 2023. 8.1 folded the seller note into the same 50 percent limited bucket as investor equity and extended its seasoning to 36 months. It did not stop it counting.

Where 8.1 sits in the sequence

Version 8 was amended by a year of notices that 8.1 now consolidates. A lender underwriting a Version 8 file numbered through September 30 reads the base SOP together with each of these; from October 1 the consolidated 8.1 text governs.

One point on authority. 8.1 was issued as an internal SOP under an Information Notice, not through notice-and-comment rulemaking. As a loan program requirement under 13 CFR 120.10 it binds lenders and CDCs, but it can be changed by another notice. In July 2026 the Government Accountability Office concluded, in opinion B-338157, that two of SBA's March 2026 notices amending Version 8 met the Administrative Procedure Act's definition of a rule and should have been submitted under the Congressional Review Act. GAO took no position on other SOP amendments. The point is not that 8.1 is vulnerable; it is that a rule which arrived by notice can leave by notice, and a lender's credit policy should be written to survive either.

What SOP 50 10 8.1 means for the SBA feasibility study

Read from the consultant's side of the file, 8.1 is not primarily a tightening of acquisition lending. It is a rule about which third-party report may be used to prove which thing.

Three independent reports can sit on a change-of-ownership credit file. The business valuation says what the business is worth and caps the debt. The Quality of Earnings report says whether the past is real and feeds the coverage test. The feasibility study says whether a projected business or project is viable. Only the last of the three tests the future. Appendix 15 removes the projection from the coverage test on acquisitions and installs the Quality of Earnings report to prove the past. It does not abolish the future-facing question. It relocates it to wherever the deal goes next.

Four paths for a deal that cannot clear 1.25x on history

It can die. The cleanest lender response to a file that fails historical coverage is to decline it, and a declined deal generates no report of any kind. In the first year this is likely the most common outcome, and the market was already contracting: through the first nine months of FY2026 the 7(a) program ran about a third lower by count and a fifth lower by dollars than the same window a year earlier, on a base of 1,141 participating lenders in July 2026, a thirty-year low.

It can be recharacterized as a Business Expansion. The four-digit NAICS test and the removal of the geographic and identical-ownership tests make that materially easier for a seasoned operator, and the lane carries the lower 1.15x floor and a potential equity waiver. But the lane is underwritten on the acquirer's own two years of operating history and combined-entity cash flow, not on a market study. It does not, in general, generate a feasibility study, and the SOP's anti-avoidance posture, Initial Acquisition as the default, each expansion condition documented, the category coded and visible, blunts cosmetic relabeling.

It can be restructured as a partial change of ownership or an Owner Buyout, keeping the seller or an existing owner in the deal. Outside buyers must take less than 50 percent and cannot become the largest holder; asset-purchase structures are barred from partial-change treatment; multi-step partials are ineligible; any retained seller equity triggers a full guaranty for the later of two years after final disbursement or twelve consecutive months current. It does not generate a study either.

Or the buyer can walk away from the acquisition and build instead, or open a de novo location in the same market as a start-up. Both are projection files. Both are files where a study is expected, and on special-purpose property both trip the 504 triggers. This is the one path that unambiguously grows the feasibility population. It is a directional inference rather than a documented volume as of September 2026, and it is the path the calculator above points at when it returns the projection-dependent verdict.

Our read, stated with the caveats it deserves: the feasibility population grows at the margin, by substitution rather than by mandate; the growth is small; and it is partly offset by a shrinking acquisition market and by the rational preference of lenders to decline rather than rebuild. The public data cannot settle it. The SBA loan-level file has no purpose field, no coverage field and no projections flag. What can be sized is the segment: in FY2025 the 7(a) program approved a record 78,078 loans for $37.3 billion, of which change-of-ownership lending was about $8.29 billion across roughly 7,000 loans at an average of $1.18 million, on a third-party classification of the loan-level data.

Why SBA did this, and what the data say back

SBA's stated rationale, written into Appendix 15, is that change-of-ownership transactions have grown to be among the largest categories of 7(a) lending and carry credit risks not present in other segments. The wider context is the program's return to negative cash flow: about $397 million in FY2024, the first in over a decade, which the agency attributed to a rise in early defaults among under-qualified buyers and to the waiver of some $460 million in upfront lender fees between 2022 and 2024. The FY2024 default rate reached 3.7 percent, the highest since 2012, and guaranty purchases rose from roughly $733 million in FY2022 to about $1.6 billion in FY2024. The program is required by statute to run at zero subsidy.

The complication is that acquisitions, taken as a whole, have performed better than the rest of the book. On a cumulative FY2020 to FY2025 basis change-of-ownership loans defaulted at 0.71 percent against 1.99 percent for new businesses and 1.43 percent for start-ups; on an FY2025 annual basis acquisition loans ran 1.93 percent against 2.71 percent for the rest of 7(a). What deteriorated fastest was the top of the size distribution, where loans of $3 million and above fail late rather than early, grinding down over years three to five as rate resets work through coverage. The $3 million Quality of Earnings threshold is aimed at that part of the book. The 1.25x historical test on every Initial Acquisition sweeps in a great many loans that were never the problem.

Why the study is not the QoE, and cannot be

On a file at or above $3 million a lender will be tempted to treat the Quality of Earnings report as the independent analysis and skip the study. On a stabilized business bought on trailing numbers that is correct; such a file never needed a study and still does not. On a projection-dependent file it is a category error. The Quality of Earnings report is a backward-looking reconciliation of cash to books, prepared under a consulting standard that prescribes no procedures and no content. It does not size a trade area, inventory the competitive supply and the pipeline, test absorption, or model the year in which the sponsor's plan either works or does not. Those are the tasks an independent study performs, and they are what a credit committee or an SBA reviewer looks for when a file is being carried by a projection.

The distinction matters at purchase. When a loan defaults early, the reviewer holds every third-party report in the file and asks what each was relied on for. The Office of Inspector General has repeatedly identified change-of-ownership loans as the high-risk category and missing or deficient valuations as a recurring denial trigger; a later evaluation found SBA had decided 16 of 32 reviewed purchase denials without sufficient evidence, and there is no administrative appeal for a lender facing a repair on a 7(a) loan. A file that used a Quality of Earnings report to support a growth projection has used a report for a purpose it does not serve. A file that used a feasibility study to test the projection, and reconciled it to the valuation and the appraisal, has an answer.

The special-purpose collision, and a worked example

On special-purpose property a third report is always in the file: the going-concern appraisal, from a Certified General appraiser with at least four equivalent going-concern assignments in the last 36 months, which must allocate value among land, building, equipment and intangibles. That allocation is where two competent, credentialed appraisers can legitimately diverge. The approach associated with Stephen Rushmore removes business value by deducting management and franchise fees from stabilized income; the business enterprise value approach additionally deducts a return on and of furniture, fixtures and equipment and start-up costs, moving more value out of the real estate. In the most-cited illustration, a 221-room hotel valued as of 1999 came out at $75,000 per room of real property, 60 percent of total value, under the first method and $45,000 per room, 36 percent, under the second. Courts in California and Florida have since found the first method incompletely applied on particular facts. Both remain accepted.

Under 8.1 that allocation acquires a new consequence. Consider a first-time buyer, an Initial Acquisition, paying $5.6 million for a limited-service hotel with its real estate. Trailing EBITDA is $760,000 at the last fiscal year-end and $700,000 the year before, with $90,000 of seller add-backs; the sponsor projects $1.05 million. The structure is a $5.0 million 7(a) loan at 9.5 percent over 25 years, a $355,000 seller note on full standby, and $540,000 of the buyer's own cash on a $5.95 million total project cost. Coverage is not the problem: on adjusted history the deal clears 1.54x against 1.25x, and it clears 2.00x with the projection admitted, so it is an acquisition under both versions. The equity is not the problem: $540,000 of unlimited cash plus $355,000 of seller standby, within the limited cap, covers the $595,000 injection.

The Quality of Earnings trigger is the problem, and it turns on the appraiser. If the going-concern appraisal allocates $2.9 million to the real estate, the business purchase price is $2.7 million and no report is required. If a second appraiser, applying the other accepted method, allocates $2.4 million, the business purchase price is $3.2 million and a lender-ordered report costing $15,000 to $50,000 and taking two to six weeks becomes mandatory, and its earnings figure, not the seller's, drives the coverage test. Nothing in the SOP tells the lender which allocation to prefer, and nothing tells the underwriter how to reconcile the appraisal's implied intangible value with the goodwill the business valuation implies. On hotels, gas stations, car washes, self-storage, senior living and RV parks that gap now sits in every file near the threshold.

What the study must contain on an 8.1 file

A feasibility study written for a file numbered after October 1 is written to the Appendix 15 category and to the lender's floor, not to a generic 1.15x. It states the historical, diligence-adjusted coverage on the SOP's own definition, period, basis, add-backs and support, rent add-back, full denominator with non-standby seller paper at a ten-year amortization, so the reviewer can see the gap the projection is being asked to close. It carries the sponsor's projection as a scenario with its assumptions exposed, a downside case that removes the growth thesis, and the year in which coverage reaches the floor under each. On special-purpose property it reconciles its stabilized income to the going-concern appraisal's allocation and states which method the appraiser used, because the appraisal's real-property value sets the collateral and the study's stabilized income will be compared to the appraiser's. Where a Quality of Earnings report exists it adopts that report's adjusted earnings as the historical base rather than the seller's recast. And it says, in one sentence the underwriter can quote, whether the deal is an acquisition file or a feasibility file.

Our SBA feasibility study consultant page sets out the fifteen components a lender-grade study carries and how each is written for a delegated lender versus SBA program review. The fee is unchanged by the rule; the cost estimator returns a scoped band for the asset class, program and timeline, and the published price bands show what each asset class carries.

For where the rule sits inside the wider program, see our SBA loan program overview, the SBA versus conventional comparison, and feasibility study versus market study. Files that may route to USDA instead sit on the USDA program page. General scope for any lender is on the feasibility study consultant homepage, with the long-form complete guide behind it.

Asset-class notes for files numbered after October 1

What the market has said in the first four weeks

The trade infrastructure moved within hours. The lenders' association published its summary on August 14 and ran member webinars from August 27, with dedicated change-of-ownership sessions in September; SBA's Office of Capital Access held lender calls in the last week of August; law firms and accounting firms issued client alerts within days. The substantive reaction has concentrated on the equity cap, because that is where deals break, and on the seller-note myth, which named lenders and brokers spent August correcting.

On price, the honest position is that no dataset has yet isolated an 8.1 effect. The most recent broker data, for April to June 2026, show 2,117 businesses changing hands, down 10 percent on both the prior quarter and the prior year, with the average cash-flow multiple up 2 percent to 2.7x and the median sale price down 1 percent to $349,250. Multiples held while volume fell. In the same survey 78 percent of buyers expected to use SBA financing, 90 percent expected seller financing, and 29 percent of sellers planned to offer it. The compression thesis tied specifically to 8.1 is forecast, not measurement; the first read that could confirm or refute it is the third-quarter data due in mid-October.

A lender's checklist for the first 8.1 file

1. Confirm in writing which SOP governs, from the expected E-Tran loan-number date, before scoping any third-party report.
2. Assign the Appendix 15 category in the credit memorandum with each condition tested; Initial Acquisition is the default.
3. Compute coverage on the SOP's definition and code the historical ratio; treat the projection as review material, not support.
4. Trace every dollar of the injection to a bucket; show limited sources at or below half; reflect the distribution lock in the operating agreement.
5. Order the business valuation and, on special-purpose property, the going-concern appraisal at engagement, and require the appraiser to state the allocation method.
6. Test the $3 million trigger net of the appraised real estate; if triggered, order the Quality of Earnings report for the lender and treat any approval issued before it returns as conditional.
7. If the deal clears only on a projection, scope an independent feasibility study to the category floor and treat the file as a feasibility file.
8. Write a one-paragraph reconciliation of the earnings figures across the reports; the SOP will not supply one and a purchase reviewer will ask for it.

Frequently asked questions

Related pages

• SBA feasibility study consultant
• SBA DSCR calculator, SOP 50 10 8 vs 8.1
• What SOP 50 10 8 changed in 2025
• The consultant's role under SOP 50 10 8.1
• SBA 504 feasibility studies
• Special-purpose property under the SOP
• Who is qualified to prepare the study
• Hotel feasibility study
• Feasibility study cost
• Request a scoped proposal

Sources

1. U.S. Small Business Administration, Information Notice 5000-880695, Issuance of SOP 50 10 8.1, August 14, 2026, effective October 1, 2026
2. U.S. Small Business Administration, SOP 50 10 8.1, Lender and Development Company Loan Programs, Appendix 14, Refinancing, and Appendix 15, Changes of Ownership
3. U.S. Small Business Administration, SOP 50 10 8, Lender and Development Company Loan Programs, effective June 1, 2025, Information Notices 5000-866746 and 5000-868665
4. U.S. Small Business Administration, Procedural, Policy and Information Notices 5000-872764, 5000-872050, 5000-875701, 5000-876441, 5000-876626, 5000-876777, 5000-877673, 5000-879058, 5000-879464, 5000-881477
5. 13 CFR 120.10, 120.160(b), 120.452 and 120.524; 13 CFR Part 134 Subpart L
6. NAGGL, Two Major SBA Announcements: Issuance of SOP 50 10 8.1 and a New Expansion of the ITL Program, August 14, 2026; NAGGL, President Signs Continuing Resolution Through December 11, September 3, 2026
7. Coleman Report, This Just In: SBA Releases SOP 50 10 8.1, Effective October 1, 2026, August 14, 2026
8. CliftonLarsonAllen, The SBA Now Requires a Quality of Earnings on Larger Acquisition Loans, August 2026; Brady Ware, New SBA Quality of Earnings Rules: SOP 50 10 8.1 Guide, 2026
9. Doeren Mayhew, SOP 50 10 8.1: What SBA Lenders Should Be Thinking About Before Oct. 1, 2026
10. Pioneer Capital Advisory, SBA Investor Equity Rules 2026: SOP 50 10 8.1 vs 8, and SBA Expansion Acquisition Rules 2026: SOP 50 10 8.1 vs 50 10 8, August 2026
11. EBIT Community, SBA SOP 50 10 8.1: New Business Acquisition Rules, and SBA Acquisition Market Pulse Q4 2025
12. Funder Intel, SBA SOP 50 10 8.1: 7 Things Brokers Need to Know Before October 1, 2026
13. Starfield and Smith, Best Practices: Financing Partial Changes of Ownership Under SOP 50 10 8, 2025
14. AICPA, Statement on Standards for Consulting Services, CS Section 100
15. Stephen Rushmore, The Rushmore Approach vs. the Business Enterprise Approach, Hospitality Net; SHC Half Moon Bay LLC v. County of San Mateo, 226 Cal.App.4th 471 (2014)
16. SBA Office of Inspector General, Reports 15-09 and 16-22, High Risk 7(a) Loan Review Program; SBA OIG evaluation, SBA's 7(a) Loan Guaranty Purchase Denial Review Process
17. U.S. Small Business Administration, News Release 25-41, March 27, 2025; SBA 7(a) and 504 Activity Reports, FY2025 year-end
18. Lumos Data, SBA 7(a) Loan Data and Program Performance: FY2026 Analysis, and SBA 7(a) Default Rates 2026; GoSBA Loans, SBA Loan Default Rates: Startups vs Acquisitions vs Working Capital, March 2026
19. BizBuySell, Q2 2026 Insight Report; IBBA and M&A Source, The Market Pulse Survey Q2 2026, August 25, 2026
20. U.S. Government Accountability Office, Opinion B-338157, July 1, 2026

Prepared for practitioner use; not legal, tax or regulatory advice. SBA publishes SOP 50 10 8.1 only as a Word document, and citations reference its internal headings. Provisions described as reported from industry sources have not been verified against a paginated official copy. Verify the operative rule against the current SOP at the loan-number date.