Small Business Administration rewrites 7(a) loan rules with manual underwriting and collateral changes

If you are planning to apply for a Small Business Administration loan this year, the rules just changed under your feet. According to Kiplinger, the Small Business Administration has quietly rewritten several rules for loans, impacting how you qualify and how long your application takes. Automated credit scoring is completely gone for small 7(a) loans. For years, lenders used the FICO Small Business Scoring Service to fast-track applications without a deep dive into financials. As of March 1, 2026, that shortcut is gone. Every application now goes through full manual underwriting, including debt service coverage ratio documentation and at least 2 months of bank statements. In practice, a loan that used to clear in a couple of weeks now takes considerably longer because a human underwriter has to review the full financial picture. Collateral requirements have also expanded dramatically, with the old threshold dropping sharply below $500,000. A $150,000 working capital loan that once sailed through with minimal collateral now often requires a lien on equipment, inventory, or personal assets. Furthermore, acquisitions now face a firmer 10% equity injection requirement as standard practice for riskier transactions. A buyer targeting a $2 million business acquisition now needs to plan for roughly $200,000 in equity before closing costs. For your business, this means your financial documentation must be spotless before you apply. If your bookkeeping has been informal, tighten it up today so you are not caught off guard mid-deal.