Major Changes to 7(a) Small Loan Underwriting: What the SBSS Sunset Means for Business Owners

Effective March 1, 2026, the SBA is eliminating the use of the FICO Small Business Scoring Service Score, commonly known as the SBSS Score, for 7(a) Small Loans.

For business owners pursuing SBA loans, this marks a meaningful shift in how smaller SBA 7(a) loan applications will be evaluated.

Understanding what is changing and how it affects your eligibility is critical as we approach the transition deadline.

What Is the SBSS Score?

The SBSS Score has historically been used as a screening tool within SBA lending for 7(a) Small Loans. It provided an automated credit scoring mechanism that helped determine whether an application met minimum thresholds for further review.

Beginning March 1, 2026:

• SBA will no longer issue SBSS Scores for 7(a) Small Loans
• Applications will no longer be screened using SBSS
• Underwriting must follow updated standards outlined in SOP 50 10 8

Applications approved in E-Tran before 11:59 PM Eastern on February 28, 2026, may continue to use the SBSS Score. After that date, all 7(a) Small Loans must comply with the new underwriting requirements.

What Replaces the SBSS Score?

With the removal of automated screening, lenders must now apply prudent, generally accepted commercial credit analysis processes similar to those used for their non-SBA guaranteed commercial loans.

This means greater emphasis on:

• Full credit analysis of the applicant and guarantors
• Debt service coverage evaluation
• Review of recent bank statements
• Analysis of projected earnings when applicable
• Documentation explaining why credit is not available elsewhere

For 7(a) Small Loans, the required Debt Service Coverage Ratio must be at least 1.1:1 based on historical or projected cash flow.

SBA Express loans are not affected by this change.

What This Means for Small Business Owners

For many entrepreneurs seeking small business loans, particularly those pursuing an SBA 7(a) loan under $350,000, this shift moves underwriting away from a primarily score-driven process toward a more comprehensive credit review.

This can work both ways.

Applicants with strong cash flow, clear repayment ability and well-documented financials may benefit from a more holistic evaluation. On the other hand, businesses that relied on minimum scoring thresholds without strong financial fundamentals may face additional scrutiny.

This change reinforces that SBA lending is not automated financing. It is relationship-based commercial lending backed by government guaranty.

Additional Documentation Requirements

The updated underwriting standards require lenders to address several additional elements in their credit memorandum, including:

• Explanation of working capital needs when applicable
• Review of franchise disclosure information when relevant
• Description of collateral and estimated value
• Discussion of liens, judgments or pending litigation
• Justification for any debt refinancing

These requirements emphasize prudent lending standards and reinforce SBA’s focus on repayment ability.

Why Experience in SBA Lending Matters More Than Ever

With the SBSS Score sunset, the quality of underwriting becomes central to approval success.

This is where experience, structure and preparation matter.

At Alliance Capital, we believe business growth changes communities for the better. Our role in SBA lending is to guide business owners through each step in manageable stages, ensuring documentation is clear, cash flow is properly presented and eligibility standards are met.

The removal of automated screening reinforces what we have always believed: strong small business loans are built on solid fundamentals, thoughtful analysis and relationship-driven lending.

Preparing for the March 1^st Transition

If you are considering applying for:

• An SBA 7(a) loan under $350,000
• Working capital financing
• Small business loans for startups
• Expansion or acquisition financing

It may be wise to begin discussions now to determine how the timing of your application aligns with these underwriting changes.

Alliance is ready to come alongside you in your business journey and help you navigate these updates with clarity and confidence. If you would like to evaluate your eligibility under the new 7(a) Small Loan standards, our team is here to help.