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SBA 504 Program Updates Effective August 1st

On August 1st, new rules impacting the SBA 504 program went into effect. Per the Small Business Administration (SBA), these program updates seek to “increase small businesses’ ability to access funding to start up and grow.†Specifically, the SBA has eased its eligibility, credit, and documentation requirements resulting in more streamlined loan processing and faster approvals.

The SBA 504 loan process has not changed for third party lending partners, but these program updates will allow CDCs the flexibility to continue to use prudent underwriting practices and maintain requirements to focus on ensuring repayment ability.

Listed and linked below are the key documents outlining these program updates. We anticipate the SBA will release an updated version of SOP 50 10 7 with technical corrections in the future. Stay tuned for updates on this and other news related to the SBA 504 program.


  • SBA Procedural Notice 5000-846607 focuses on the implementation of the SBA’s Final Rule on Affiliation and Lending Criteria for the SBA Business Loan Programs (88 FR 21074, effective May 11, 2023).
  • The SBA eliminated many of the complex affiliation rules based on management control, identity of interest, and franchise/license agreements. The new rules focus on ownership of entities in related industries. Affiliation is now generally defined as more than 50% ownership in another entity with a similar NAICS code prefix.
  • For a more detailed look at the affiliation decision, please see this Affiliation Analysis provided by the National Association of Development Companies (NADCO).


  • SBA Procedural Notice 5000-846607 streamlined and modernized its lending criteria – reducing the number of factors that are required to be applied in determining creditworthiness and reasonable assurance of repayment from nine to three. Lenders and CDCs must still use appropriate and prudent generally acceptable commercial credit analysis processes and procedures consistent with those used for their similarly sized, non-SBA guaranteed commercial loans.
  • When approving loans, SBA lenders and CDCs may consider (as applicable) (1) The credit score or credit history of the applicant; (2) The earnings or cashflow of the applicant; (3) Where applicable, any equity or collateral of the applicant.
  • A borrower who is currently incarcerated, on probation, on parole, or is under indictment for a felony or any crime involving or relating to financial misconduct, or a false statement is ineligible for an SBA 504 loan. Past convictions will not impact loan approvals.


  • SBA Procedural Notice 5000-846991 implements the removal of the requirement for a Loan Authorization for SBA 504 loans in accordance with the Final Rule on Small Business Lending Company (SBLC) Moratorium Rescission and Removal of the Requirement for a Loan Authorization (88 FR 21890, effective May 12, 2023).
  • The Loan Authorization is formally replaced by a Terms and Conditions document.
  • SBA will continue to require and provide a Terms and Conditions document that can be generated from within SBA’s ETRAN system.
  • There is no change to the content of the Terms and Conditions document vs. the Loan Authorization currently.

For additional information, view and read testimony by SomerCor President and CEO, Manuel Flores, who testified before the House Small Business Committee on behalf of NADCO regarding these rule changes.

Download the program flyer and connect with a member of SomerCor’s loan origination team to learn more about how the SBA 504 loan program supports improved cash flow for small businesses.

Contact Us

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Margaret Griffin

EVP, Chief Lending Officer
(312) 360-3320

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Eric Bacon

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Darin Gehrke

SVP Market Lead for Central and Southern Illinois
(217) 793-1075

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Elisabeth Williams