The Small Business Administration (SBA) recently announced significant changes to its size standards, leading to more opportunities for businesses to qualify for SBA loans.
According to the new SOP (Standard Operating Procedure), the SBA has increased the eligibility thresholds for its SBA 7(a) and SBA 504 lending programs. These adjustments aim to accommodate inflation and support a broader pool of qualified borrowers by making SBA financing even more obtainable.
Summary of New SBA Size Standards Effective March 18th, 2024
A small business may be eligible for SBA 504 or 7(a) financing if:
- Tangible Net Worth does not exceed $20 million (up from $15 million)
- Average Net Income after taxes does not exceed $6.5 million (up from $5 million) over the past two years
- Size standards increase by 25 percent when all proceeds are used within a labor surplus area
- visit the US Department of Labor website to determine if your business location is in a labor surplus area
If a business exceeds these size standards, they may still qualify under the industry size standards.
Impact and Benefits
This update represents a significant adjustment to the former size standard, reflecting a 34.46 percent increase to account for inflation since the establishment of the statutory standard in 2010.
The SBA’s decision to raise size standards reflects its commitment to supporting even more small businesses and fostering economic resilience. Many eligible borrowers are unaware that they can acquire multiple SBA loans and that there is no limit to total project financing.
For additional details, please refer to the Final Rule issued by the SBA on 2/15/2024.
*All SBA 504 information above is subject to full pending SBA implementation guidance – required regulations, notices, and revised forms. The regulations surrounding a CDC’s ability to implement the new regulatory changes are still being finalized. The SBA is expected to provide more information as soon as it is available.
Please check back for the most up-to-date information and contact a TMC Financing representative to discuss your project details.