What It Actually Means
The SBA has officially announced a meaningful change to how certain SBA loans will be screened.
Effective March 1, 2026, the SBA will discontinue use of the FICO Small Business Scoring Service (SBSS) score for 7(a) Small loan applications.
Before the industry overreacts, it’s important to understand what is — and is not — changing.
Read the full SBA policy update in our Resource Center
What the SBA Actually Announced
Under Procedural Notice 5000-875701:
• SBSS will no longer be generated for 7(a) Small loans
• SBA will stop screening these loans using SBSS
• Lenders must instead rely on prudent commercial credit analysis
This change applies to 7(a) Small loans (generally $350,000 and under) — not the entire SBA program.
That distinction matters.
Important: SBA Express Loans Are Not Affected
One of the most misunderstood parts of this update is scope.
SBA Express loans are not affected by this change. Lenders can continue using permitted business scoring models for Express products.
If you’re hearing “SBSS is gone everywhere,” that’s simply not accurate.
What Replaces the SBSS Screen
The SBA is not eliminating credit discipline. It is shifting responsibility back to lenders.
Going forward, lenders must:
• Use generally accepted commercial credit analysis
• Follow the same standards used for similar non-SBA loans
• Document reasonable assurance of repayment
Importantly, lenders may still use their own business credit scoring models, as long as those models are permitted by their regulator and are not based solely on consumer credit.
In practical terms, this increases lender discretion.
Debt Service Coverage Still Matters
Here’s where many brokers are going to get this wrong.
For 7(a) Small loans, borrowers must still demonstrate a debt service coverage ratio (DSCR) of at least 1.10x on a historical and/or projected basis.
This is not a “no-cash-flow” program.
Repayment ability is still required.
Why the SBA Made This Move
Reading between the lines, the SBA appears to be:
• Reducing reliance on a single automated gatekeeper
• Giving lenders more underwriting flexibility
• Aligning SBA small-loan underwriting with conventional commercial practices
This continues the broader modernization trend inside the 7(a) program.
What This Means for Borrowers
Potential positives:
• Fewer automatic score-based declines
• More files reaching full credit review
• Greater flexibility for lenders to evaluate the full borrower story
The part most people will miss:
As SBSS fades, lender overlays become more important — not less.
Expect wider variance between lenders on:
• approvals
• structure
• documentation
• credit appetite
Borrower positioning and lender selection will matter more than ever.
Check your SBA pre-qualification here
How Irving Fund Is Approaching This Shift
At Irving Fund, we’ve long focused on matching strong operators with the right SBA execution path — not relying solely on automated screens.
As underwriting discretion increases, experience navigating lender credit boxes becomes even more valuable.
Bottom Line
The SBA is officially sunsetting SBSS screening for 7(a) Small loans effective March 1, 2026.
But this is not a free-for-all:
• Cash flow still matters
• Credit analysis still matters
• Lender judgment matters more than ever
Frequently Asked Questions
Is the SBA completely eliminating the SBSS score?
No. The SBA is discontinuing use of the SBSS score for 7(a) Small Loans only. Other programs, including SBA Express, are not affected.
When does the SBSS change take effect?
The change becomes effective March 1, 2026. Loans approved before February 28, 2026 may still use the SBSS score.
Does this mean SBA loans are easier to qualify for?
Not necessarily. Lenders must still follow prudent commercial underwriting standards and borrowers must show repayment ability.
Is cash flow still required?
Yes. For 7(a) Small Loans, borrowers must demonstrate a minimum DSCR of 1.10x on a historical or projected basis.
Can lenders still use credit scoring?
Yes. Lenders may use their own business credit scoring models if permitted by their regulator, but those models cannot rely solely on consumer credit scores.
