SBA rules · SOP 50 10 8.1
Can an SBA loan be assumed by a buyer?
An existing SBA 7(a) or 504 loan may be assumed by a buyer, but while SOP 50 10 defines the allowable fees and certain eligibility restrictions, the detailed servicing requirements and procedures are governed by SOP 50 57 and SOP 50 55.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- 7(a) assumption fees and rules: In an assumption by another entity, SBA does not require a new guaranty fee. The lender may charge an assumption fee consistent with its non-SBA loans, provided it is reasonable and does not exceed 1 percent of the outstanding principal balance at the time of assumption, payable by the seller or the assumptor. SBA's guaranty does not cover assumption fees, and lenders must review SOP 50 57 for procedures to process an assumption request.
- 504 assumption fees and approval: A 504 assumption fee may not exceed 1% of the outstanding principal balance of the loan being assumed, requires SBA's written approval, and is paid by the Borrower to the CDC. Furthermore, CDCs may not unilaterally approve any change in the ownership of a Borrower for 12 months after final disbursement.
- Eligible assumptor requirements: For servicing requests such as substituting an owner or SBA-required guarantor, the incoming individual may not be an Ineligible Person, and the lender must document and verify eligibility.
- What the SOP does not cover: SOP 50 10 does not contain the specific credit underwriting standards, closing checklists, or seller release conditions for assumptions, as all post-disbursement servicing and liquidation actions must comply with SOP 50 57 for 7(a) loans and SOP 50 55 for 504 loans.
The source
What the SOP says
“Lenders should review SBA’s SOP 50 57, 7(a) Loan Servicing and Liquidation, for procedures to process an assumption request.
“In the case of an assumption of the loan by another entity, SBA does not require a new guaranty fee, and lien positions are often maintained eliminating the need for recording fees.
“The fee must be reasonable in relation to services provided and cannot exceed 1 percent of the principal balance outstanding at time of assumption.
“SBA’s guaranty does not extend to assumption fees and, at time of guaranty purchase, SBA will not pay any portion of such fees.
“This fee may be paid by the seller or the assumptor.
“Not to exceed 1% of the outstanding principal balance of the loan being assumed.
“Upon SBA’s written approval
“For servicing requests (e.g., substitution of an owner or SBA-required guarantor), the new individual may not be an Ineligible Person.
“CDCs may not unilaterally approve any adjustment to or change in the ownership of a Borrower, including a change in percentage of ownership, for 12 months after final disbursement on any loan.
“Once an SBA Loan (defined as the full amount of the 7(a) loan or the Gross Debenture amount of the 504 loan) is disbursed, SBA Lenders must comply with the servicing and liquidation requirements in SOPs 50 57 (for 7(a) loans) and 50 55 (for 504 loans).
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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.