SBA Rule Changes Are Here — What Now?
Relying on SBA funding to scale? That road just got narrower.
For years, SBA-backed 7(a) loans have been a go-to source of affordable capital for small and mid-sized businesses. However, recent changes to Standard Operating Procedures (SOP) bring back tighter credit requirements, stricter ownership standards, and new limits on use of proceeds.
So, if you’ve been counting on SBA funding to support your next stage of growth, here’s what changed, who’s impacted most — and how Hum Capital can step in to help.
What’s Changed? (Effective June 1, 2025)
The SBA’s updates to its loan programs introduce new hurdles — particularly for startups, minority-owned, venture-backed, and non-traditional businesses.
📉 Reduced loan cap for small 7(a) loans
The maximum size of a “small loan” has been lowered from $500K to $350K, limiting the amount of working capital companies can now access through the SBA.
📈 Higher SBSS credit score threshold
To qualify, borrowers now need a Small Business Scoring Service (SBSS) score of 165 — up from 155. This composite score weighs multiple business and owner data points, which makes it more difficult for newer businesses to qualify.
🔒 Mandatory insurance for loans over $50K
Businesses must now carry hazard insurance (Business Personal Property coverage) for any SBA loan greater than $50,000 — adding time and cost to closing.
Broader Changes Across All SBA 7(a) Loans
🚫 Tighter rules for refinancing
SBA loans can no longer be used to refinance merchant cash advances (MCA) or factoring lines, effectively closing the door on a once-common path to escape expensive, short-term debt.
🏷️ Franchise verification is now required
The SBA reinstated its Franchise Directory, and businesses operating under a franchise must be listed to qualify. Brands have until July 31, 2025, to comply, or they risk removal.
🇺🇸 New U.S. ownership verification
Companies must now verify 100% ownership by U.S. citizens, nationals, or permanent residents. This rule, which had previously been loosely enforced, is now a formal, document-driven requirement.
🧩 Complex ownership structures may trigger ineligibility
Businesses with venture or private equity backing, minority founder ownership, or protective investor rights could now be classified as “affiliated” with other entities — disqualifying them under SBA size and independence tests.
Who’s Most Affected by These Changes?
These updates disproportionately impact businesses that are:
- VC- or PE-backed, with complex cap tables or minority founder ownership
- Early-stage or pre-profitable, falling short of the 165 SBSS threshold
- Franchise-based, but not listed in the SBA directory
- Internationally owned, even partially
- Carrying high-cost short-term debt, hoping to refinance into lower-rate SBA capital
If this sounds like your business, you’re not alone — and you’re not out of options.
How Hum Can Help
At Hum Capital, we offer founder-friendly financing that isn’t limited by SBA rules. So, if the door has closed on SBA capital, we’re here to help you open a better one.
✅ Non-dilutive capital that fits your model
We offer flexible debt solutions like revenue-based financing, cash flow loans, and hybrid structures — designed around your growth, not government eligibility.
✅ No one-size-fits-all underwriting
Our platform uses live financial data, not rigid checklists, to match you with the right capital partners from our network of 900+ institutional investors and lenders.
✅ Fast decisions, no red tape
You won’t wait months or get buried in paperwork. Instead, our data-driven process helps you get funded in days — with terms that support your growth, not slow it down.
Discover your funding options on Hum and learn how much you can raise — all based on your performance, not your pitch deck.
