SBA rules · SOP 50 10 8.1
What is a special purpose property for an SBA loan?
A Special Purpose Property is defined as a limited-market property with a unique physical design, special construction materials, or a layout that restricts its utility to the use for which it was built.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- Definition: SBA defines a Limited or Special Purpose Property as a limited-market property with a unique physical design, special construction materials, or a layout that restricts its utility to the use (or specific use) for which it was built.
- Property examples: SBA provides a non-exhaustive list of examples, including bowling alleys, car washes, gas stations, hotels and motels, marinas, nursing homes and assisted living facilities, golf courses, wineries, farms, sports arenas, and cold storage facilities where more than 50% of the total square footage is equipped for refrigeration.
- Appraiser criteria: For 504 loans, the appraiser must be experienced in the particular industry. For 7(a) changes of ownership, the Certified General Real Property Appraiser must have completed at least four going concern appraisals of equivalent special use property within the preceding 36 months in compliance with USPAP guidelines.
- 504 Borrower contribution: In the 504 program, financing a Limited or Special Purpose Property requires an increased borrower equity contribution of at least 15%, which increases to at least 20% if the business is also a new business.
- Credit memorandum documentation: Both CDCs and 7(a) lenders must evaluate whether a property meets the special purpose definition, document this analysis in the credit memorandum, and, for 7(a) acquisitions under SOP 50 10 8.1 in force from 10/01/2026, explain why the acquisition is integral to business operations when relying on projections.
The source
What the SOP says
“A limited-market property with a unique physical design, special construction materials, or a layout that restricts its utility to the use for which it was built.
“A “Special Purpose Property” is a limited-market property with a unique physical design, special construction materials, or a layout that restricts its utility to the specific use for which it was built.
“Below is a list that contains examples of properties that SBA considers to be a Limited or Special Purpose Property. This list is not intended to be all-inclusive and SBA may determine that other properties meet the Limited or Special Purpose Property definition.
“CDCs must address whether the Project Property is Limited or Special Purpose in their credit memorandum and include an explanation of their conclusion.
“When the collateral is a Special Purpose Property, the appraiser must be experienced in the particular industry.
“The Certified General Real Property Appraiser must have completed no less than four going concern appraisals of equivalent special use property as the property being appraised, within the last 36 months, as identified in the qualifications portion of the Appraisal Report.
“The Lender must document in its credit memorandum the basis for its determination that the property meets the definition of a Special Purpose Property in Para. C.1.b. of this Appendix, that acquisition of the property is integral to the acquisition and continued operation of the business, and why reliance on projections rather than on the historical performance of the business being acquired is appropriate.
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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.