Major SBA Lending Changes Coming October 1, 2026

What Buyers, Sellers & Business Owners Need to Know

The SBA lending landscape is changing again.

Beginning October 1, 2026, new SBA SOP requirements are expected to impact business acquisitions, expansions, seller involvement, and certain seller-note structures.

For buyers and business owners considering an SBA transaction, understanding these changes early could make a significant difference in how a deal is structured.

1. Higher DSCR Requirement for Acquisitions

One of the biggest changes involves Debt Service Coverage Ratio (DSCR).

For SBA-financed business acquisitions, the minimum historical DSCR requirement will increase to:

1.25x DSCR

For business expansions, the requirement remains at:

1.15x DSCR

Why Does This Matter?

A higher DSCR requirement means acquisition targets will need to demonstrate stronger historical cash flow relative to the proposed debt payments.

For some transactions, this could affect the maximum loan amount, required equity, purchase price, or overall deal structure.

A business that qualifies at 1.15x may not necessarily qualify at 1.25x, making it increasingly important to analyze the financials before finalizing an LOI or purchase agreement.

2. Sellers Can Stay as Consultants Longer

There is also some positive news for buyers.

Under the new rules, sellers may remain involved as consultants for up to:

24 months after closing — up from 12 months.

This can be especially beneficial when a business relies heavily on the seller's customer relationships, operational knowledge, vendor relationships, or specialized expertise.

A longer transition period can help buyers achieve a smoother change of ownership.

3. Seller Note Refinancing Window Extends

Another change affects certain payable seller notes.

The applicable refinancing window will increase from:

24 months → 36 months

This means sellers participating in these structures may have to wait an additional year before the note can potentially be refinanced.

For both buyers and sellers, the structure and terms of a seller note should therefore be carefully considered before signing the LOI.

Your Timeline May Now Be One of the Most Important Terms in Your LOI

If you're currently considering an acquisition, negotiating an LOI, or already have an SBA transaction in process, now is the time to review your financing and timeline.

At Blue Water Capital Advisors (BWCA), we work with our clients from the initial review and structuring of the transaction through lender selection, underwriting, and ultimately the closing of the loan.  We help identify potential challenges early, evaluate financing options, and work closely with our lending partners to keep transactions moving toward the finish line.  From the first conversation to the final closing, BWCA is with you every step of the way.  If you have an SBA transaction underway or are considering an acquisition, contact Blue Water Capital Advisors to discuss how the October 1 changes could affect your financing.

The team at Blue Water Capital Advisors has extensive experience in SBA lending.  Our CEO, James Rath, has prior banking experience with significant knowledge of the SBA’s policies.  Having been heavily on the credit side of banking, we are able to assist clients with SBA eligibility matters. 

For more information, feel free to reach out to us.  Don’t forget to subscribe to our newsletter.