The SBA Is Sunsetting Its Credit Scoring System

If you're planning to use an SBA loan of $350,000 or less this year — for an acquisition, working capital, or equipment — something meaningful is changing in 10 days.

On March 1, 2026, the SBA is sunsetting the SBSS — the Small Business Scoring Service score that has been the front door to every 7(a) Small Loan for years.

No more universal credit screen.

No more standardized minimum score.

Instead, each lender gets to use their own credit models and underwriting procedures.

This sounds like a minor bureaucratic shuffle.

It's not.

Let me explain what this actually means for your next deal.

The SBSS is a FICO score built specifically for small business lending.

It combines your personal credit, business credit, and financial data into a single number from 0 to 300.

For any SBA 7(a) loan of $350,000 or less — which covers a significant share of first-time acquisition deals — lenders were required to prescreen your application using this score.

The minimum was 155 for years.

The SBA raised it to 165 in June 2025 under SOP 50 10 8.

Most lenders actually required 175+ internally.

But the point is — there was a universal floor.

Every lender, every deal, same starting line.

That's gone on March 1.

The SBA published Procedural Notice 5000-875701 on January 16, 2026.

Here's the short version:

Federally regulated lenders (banks, credit unions) must now use commercial credit analysis processes consistent with how they underwrite their other non-SBA loans of similar size.

They can still use internal business credit scoring models — but those models can't rely solely on consumer credit scores.

Small Business Lending Companies (SBLCs) can keep using credit scoring as they did before, but they have to submit their scoring models for SBA review.

There's also a new hard requirement: a minimum 1.1x debt service coverage ratio on all 7(a) Small Loans, measured on a historical and/or projected cash flow basis. DSCR here is defined as EBITDA divided by total debt service — that includes all business debts, not just the SBA loan. If you have a seller note or any other obligations in the capital stack, those count.

DSCR has always mattered in practice.

Now it's codified.

A quick note for searchers targeting larger deals: if your SBA loan is above $350,000, your underwriting process hasn't changed — Standard 7(a) loans have always required full credit analysis. But two things from this notice matter regardless of loan size: the codified 1.1x DSCR requirement, and the broader signal that the SBA is pushing lenders toward more rigorous, independent credit analysis.

For deals where the SBA portion stays under $350K, three things to internalize:

1. Underwriting is less predictable.

Under the old system, you could walk into any SBA lender and know the scoring baseline.

Now each lender has their own credit model, their own thresholds, their own process.

Two lenders can look at the same deal and reach different conclusions — not because the deal changed, but because their internal models weight different factors.

This isn't necessarily bad.

But it means you need to understand your specific lender's underwriting criteria before you apply — not after.

2. Lender selection matters more than ever.

The old system commoditized the first step of SBA lending.

The new system rewards borrowers who match themselves to the right lender for their specific profile.

If you have strong business credit but thin personal credit — some lenders will weight that favorably. Others won't.

If you're acquiring a business with inconsistent historical cash flow but strong projected DSCR — some lenders will lean into the projections. Others will pass.

The variance between lenders is about to widen.

3. Some lenders might still pull SBSS anyway.

Here's the nuance.

The SBA removed the requirement — but it didn't remove the tool.

Most lenders have used SBSS for years.

It's validated, it's tested, and it's familiar.

Expect the majority of banks to keep pulling it as part of their process, even though they're no longer required to.

The difference is that a score below 165 is no longer an automatic rejection at the SBA level.

It becomes a data point in a broader underwriting conversation.

Here's how to position yourself well in this new environment:

Know your DSCR. The 1.1x minimum is now a hard floor — and remember, it's measured against total debt service including seller notes and any other business obligations. Run your numbers before you approach any lender. If the deal doesn't clear 1.1x on historical cash flow, you need a credible projection story — and you need a lender who will underwrite on projections. Likely 1.25x+ for acquisition loans.

Ask lenders about their internal credit model. This is a fair and reasonable question now. "How do you evaluate 7(a) Small Loans under the new SOP?"

Talk to multiple lenders early. The old system made lender shopping less important at the screening stage. Now the screening stage is where the variance lives. Three conversations upfront can save you months of wasted time.

Get your business credit in order before you search. If you're still in the looking phase, use this window. The lenders who build their own models are could weight business credit data more heavily — D&B, Experian Business, Equifax Business. This has always been good practice. Now it's table stakes.

Recognize the opportunity. This change doesn't just create uncertainty — it creates flexibility. Borrowers who didn't fit neatly into the SBSS framework now have a path forward with lenders who evaluate deals more holistically. If you've been told your SBSS score was borderline, this reset is a reason to try again with the right lender.

If this is useful for someone you know who's working with an SBA lender right now, forward it to them. These changes are 10 days away and most borrowers haven't heard about them yet.

SBA 7(a) lending has been running at strong volumes — over $10 billion in approvals in Q2 FY2025 alone, and more than 80% of 7(a) loans are under $500K.

The demand side of the market is strong.

But the supply side — the lending infrastructure — is shifting underneath it.

Tighter underwriting standards from 2025. Reinstated guaranty fees. The SBSS sunset. A new SOP that puts more responsibility on lenders to justify their credit decisions.

The SBA is essentially telling lenders: we trust you to do real underwriting, but you own the risk of getting it wrong.

For borrowers, this means the lender relationship matters more than ever.

Disclaimer: This guide is for educational purposes only and does not constitute legal, financial, tax, or investment advice. Business acquisitions involve significant risks, and outcomes can vary widely based on individual circumstances. Always consult with qualified professionals including attorneys, CPAs, and financial advisors before making acquisition decisions. The EBIT Community does not guarantee the accuracy of information provided or the success of any acquisition strategy. Past performance and examples do not guarantee future results.