SBA SOP 50 10 8.1, B.Ch6.A — SBA Terms and Conditions
Verbatim text of SBA SOP 50 10 8.1 (with Technical Policy Updates) section B.Ch6.A (SBA Terms and Conditions). Effective 2026-10-01 for applications received by SBA on or after that date; SOP 50 10 8 governs applications submitted through 2026-09-30. 1 provision(s) quoted from SBA's .docx.
See also
SBA lending corpus: SOP 50 10 and the active notices, with the expiry watcher.
Verbatim regulatory text
Verbatim provisions from SBA SOP 50 10 8.1, B.Ch6.A — SBA Terms and Conditions — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
SOP 50 10 8.1 B.Ch6.A
7 sections · 8,310 characters of verbatim text. Open a section to read it, or . Every section below is in the page source whether open or closed.
§Chapter 6: SBA Terms and Conditions through Disbursement for all 7(a) Loans2,335 ch
Chapter 6: SBA Terms and Conditions through Disbursement for all 7(a) Loans A. SBA Terms and Conditions The Lender’s executed SBA Form 750 is the written agreement between the SBA and the Lender requiring the Lender to comply with all SBA Loan Program Requirements as defined in 13 CFR § 120.10, including but not limited to, the applicable statute, regulations, and SOP guidance, and allowing the Lender to make loans with an SBA guaranty when authorized by SBA. The SBA Terms and Conditions is the digital loan guaranty authorization request by the Lender to SBA to authorize the Lender to make the loan with an SBA guaranty under the terms and conditions submitted in the SBA Loan System. SBA’s guaranty is subject to the terms and conditions authorized by SBA in the SBA Loan System (including any changes) and the Lender’s compliance with those terms and conditions and all other applicable SBA Loan Program Requirements. After the Lender has determined that the loan conditions in the SBA Terms and Conditions are appropriate for the terms of the credit, the Lender must close the loan in accordance with the provisions of the SBA Terms and Conditions, including any SBA-approved post-approval modifications. Unless otherwise required by SBA (e.g., OCRM), the Lender should not send SBA any other loan closing documentation, including disbursement information, except through the required periodic loan status reports using SBA Form 1502. See SOP 50 57 and the Servicing and Liquidation Actions 7(a) Lender Matrix for directions on servicing and liquidating loans. SBA does not require signatures on the terms and conditions. The terms and conditions are electronically stored in the SBA Loan System. 1. For loans processed using a Lender’s delegated authority (PLP, PLP-EWCP, SBA Express, or Export Express), the Lender submits the loan guaranty request with the SBA Terms and Conditions. The SBA loan number will be issued in the SBA Loan System. 2. For non-delegated loans processed through LGPC, the Lender submits the loan guaranty request by submitting the loan terms and conditions in the SBA Loan System. SBA will review the application and issue the SBA loan number if the loan is approved. 3. The terms and conditions that must be digitally submitted to the SBA Loan System include: a. 7(a) Lender fees payable to SBA:
iStatement of the Upfront Fee;33 ch
i. Statement of the Upfront Fee;
iiStatement of Lender’s Annual Service Fee;4,135 ch
ii. Statement of Lender’s Annual Service Fee;726 ch
ii. Statement of Lender’s Annual Service Fee; b. Repayment terms; c. Use of Proceeds; d. Guarantors; e. Collateral, including lien priority; f. Construction terms if applicable in accordance with 4. below. 4. Construction Loan Provisions 13 CFR §§ 120.200 and 120.174 a. In the construction of a new building or an addition to an existing building, regardless of whether the project is one that uses an independent licensed contractor or is a “Do-it-yourself” project, Lender must obtain evidence of compliance with the "National Earthquake Hazards Reduction Program Recommended Provisions for the Development of Seismic Regulations for New Buildings" (NEHRP), or a building code that has substantially equivalent provisions.
iThe NEHRP provisions may be found in the American Society of…135 ch
i. The NEHRP provisions may be found in the American Society of Civil Engineers (ASCE) Standard 7 and the International Building Code.
iiExamples of evidence include a certificate issued by a licensed…3,274 ch
ii. Examples of evidence include a certificate issued by a…1,009 ch
ii. Examples of evidence include a certificate issued by a licensed building architect, construction engineer or similar professional, or a letter from a state or local government agency stating that an occupancy permit is required and that the local building codes upon which the permit is based include the Seismic standards. b. If the construction component of the 7(a) loan is $350,000 or less, SBA has granted a blanket waiver on the Lender’s requirement of a performance bond and the labor and materials payment bond and evidence that the contractor carries appropriate Builder's Risk and Worker's Compensation Insurance when the Lender applies the same policies, procedures, and processes for offsetting the risk of construction that it applies to its similarly-sized, non-SBA guaranteed loans for construction. 13 CFR § 120.200 c. If the construction component of the 7(a) loan is more than $350,000: Prior to the commencement of any construction, Lender must obtain from Borrower (13 CFR § 120.200):
iEvidence that the licensed contractor has furnished a l00%…2,092 ch
i. Evidence that the licensed contractor has furnished a l00% performance bond and labor and materials payment bond and that the contractor carries appropriate Builder’s Risk and Worker’s Compensation Insurance; a) Only a corporate surety approved by the Treasury Department using an American Institute of Architects form or comparable coverage may issue these bonds. b) Only Borrower may be named as obligee on the bonds. c) SBA has granted a blanket waiver on the Lender’s requirement of a performance bond and the labor and materials payment bond and evidence that the contractor carries appropriate Builder's Risk and Worker's Compensation Insurance when: i) The Lender has retained the services of a third party construction management firm. The Lender must ensure that the third party provides commercially reasonable and prudent monitoring including funds control for all disbursements; or ii) The Lender has an existing internal construction management department that routinely manages construction for its similarly-sized, non-SBA guaranteed commercial loans. The Lender must ensure that the monitoring services provided by its construction management department are commercially reasonable and prudent and include funds control for all disbursements. iii) Lender must document in the applicable loan file that the construction was completed in conformance with the plans and specifications and that all lien waivers and releases from all material men, contractors, and subcontractors involved in the construction have been obtained. If any mechanics’ or other liens are filed or take priority over the Lender’s lien on the collateral, the Lender may be subject to a repair or denial of the guaranty. (13 CFR § 120.200) d) A copy of the final plans and specifications; and e) A copy of a Construction Contract with: i) An acceptable licensed contractor at a specified price; and ii) An agreement that Borrower will not order or permit any material changes in the approved plans and specifications without prior written consent of Lender and the surety providing the required bonds.
iiEvidence that Borrower has injected the required funds into the…173 ch
ii. Evidence that Borrower has injected the required funds into the project prior to disbursement of the loan, if Borrower is injecting funds into the construction project;
iiiObtain evidence of Borrower’s ability to pay cost overruns or…234 ch
iii. Obtain evidence of Borrower’s ability to pay cost overruns or additional construction financing expenses prior to approving any contract modification. Lender and SBA are not obligated to increase the loan to cover cost overruns;
ivMake interim and final inspections to determine that construction…112 ch
iv. Make interim and final inspections to determine that construction conforms to the plans and specifications;
vObtain evidence that the building, when completed, will comply…168 ch
v. Obtain evidence that the building, when completed, will comply with all state and local building and zoning codes, and applicable licensing and permit requirements;
viObtain lien waivers or releases from all material men,…1,293 ch
vi. Obtain lien waivers or releases from all material men, contractors, and subcontractors involved in the construction. d. “Do-it-yourself” construction and/or installation of machinery and equipment, or situations where the Borrower acts as its own contractor have proven to be generally unsatisfactory and can cause problems with lien waivers and mechanics liens, causing potential losses to the Lender and/or SBA. “Do-it-yourself” construction including renovations and/or installation of machinery and equipment, or situations where the Borrower acts as its own contractor may be permitted, if the Lender can justify and document in the loan file that: i. The Borrower/contractor is experienced in the type of construction and has all appropriate licenses; ii. The cost is the same as, or less than, either: a) What an unaffiliated contractor would charge as evidenced by 2 bids on the work; or b) A single estimate provided by a third-party construction management firm, or by the Lender’s existing internal construction management department if the Lender has an existing internal construction management department that routinely manages construction for its similarly-sized, non-SBA guaranteed commercial loans. iii. The Borrower/contractor will not earn a profit on the construction.
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