Home/ Blog/ SBA Changes March 2026

What's Changing?

On March 1, 2026, three new SBA policy updates go into effect. These layer on top of the June 2025 SBA rule changes that are still in place.

Here is a quick look at all three:

What Changed Old Rule New Rule (March 1, 2026)
Citizenship requirements U.S. citizens and green card holders eligible U.S. citizens only. Green card holders blocked.
SBSS credit score Required for 7(a) Small Loans Discontinued. Lenders use commercial credit analysis.
Interest rate base Prime rate only Prime, SOFR, or Treasury rates

Let's break each one down.

Change 1: Green Card Holders No Longer Eligible

This is the biggest change. It affects who can own a business that applies for SBA-backed financing.

What happened

On February 2, 2026, the SBA released Policy Notice 5000-876441. It updates the citizenship and residency requirements in SOP 50 10 8 to comply with Executive Order 14159.

The new rule is straightforward: 100% of all direct and indirect owners must be U.S. citizens or U.S. nationals residing in the United States or its territories.

What this means in plain English

If any person who owns any percentage of your business holds a green card instead of U.S. citizenship, your business cannot get an SBA loan. Period.

Previously, green card holders (lawful permanent residents) were treated the same as U.S. citizens for SBA purposes. That is over.

Who this affects

  • Business owners with green cards. Even if you own 100% of the business and have lived in the U.S. for decades, you no longer qualify for SBA financing.
  • Partnerships where one owner is a green card holder. If your business partner holds a green card and owns even 1%, the whole business is blocked.
  • Spouses with ownership interests. If your spouse is a green card holder and owns part of the business, the same rule applies.

Existing loans are safe. If you already have an SBA loan that was approved under previous rules, it is not affected. This change only applies to new applications submitted on or after March 1, 2026.

What to do if you are affected

You have a few options:

  • Restructure ownership. If the green card holder can transfer their ownership interest before your application, the business may qualify. Talk to an attorney first.
  • Explore conventional financing. Business loans, lines of credit, and equipment financing do not have the same citizenship restrictions as SBA programs.
  • Talk to a funding advisor. SBA is not the only path. There are programs designed for exactly this situation. The rates may be different, but the money is still available.

Change 2: SBSS Credit Score Discontinued

The second change is about how lenders evaluate your creditworthiness on smaller SBA loans.

What is the SBSS score?

SBSS stands for Small Business Scoring Service. It was an automated credit scoring tool created by FICO. It combined your personal credit data and your business credit data into a single number. The SBA required lenders to use this score as a screening tool for 7(a) Small Loans (loans up to $350,000).

Think of it like a FICO score, but for your business loan application. Lenders could use it to quickly approve or flag applications without doing a full manual review.

What is changing

Effective March 1, 2026 (per Procedural Notice 5000-875701), the SBA is discontinuing the SBSS score requirement for 7(a) Small Loans. Lenders will shift to what the SBA calls "generally accepted commercial credit analysis."

In practice, this means lenders will evaluate your loan application the way they evaluate any other commercial loan. They will look at:

  • Cash flow and DSCR. Can your business cover its debt payments? The SBA now requires a minimum debt service coverage ratio of 1.1x for small loans.
  • Bank statements. How much money flows through the business? Are deposits consistent?
  • Working capital. Does the business have enough cash on hand to operate and service debt?
  • Personal credit. Your FICO score still matters. It just will not be bundled into a single SBSS number anymore.
  • Collateral and guarantor strength. What assets back the loan? How strong is the personal guarantee?
!

This could be good news. If your business has strong cash flow but had a borderline SBSS score, this change works in your favor. Lenders will now see the full picture instead of relying on a single automated number. If you want to understand how DSCR works (the number that matters most now), read our crash course on business loan underwriting.

SBA Express loans are not affected. The SBSS sunset only applies to 7(a) Small Loans. Express lenders may continue using SBSS or their own scoring models. Loans approved before 11:59 PM ET on February 28, 2026 can still use the old SBSS process.

Change 3: New Base Rate Options (SOFR and Treasury)

The third change is more technical, but it affects how your loan is priced.

How SBA loan rates work

SBA loan interest rates are not fixed numbers. They are calculated as a base rate plus a spread. The SBA sets the maximum spread based on your loan size. Until now, the only base rate option was the Prime rate.

What is changing

Starting March 1, 2026 (per Procedural Notice 5000-875051), lenders can use three new base rates in addition to Prime:

  1. 30-day SOFR (Secured Overnight Financing Rate). This is a rate published by the Federal Reserve Bank of New York. Lenders can use the 30-day term SOFR or the 30-day average SOFR.
  2. 5-year Treasury Note rate. Based on the Federal Reserve's published interest rates.
  3. 10-year Treasury Note rate. Same source, longer maturity.

What this means for you

The maximum interest rate caps are still tied to Prime. So your rate cannot go higher than before. But lenders now have more flexibility in how they build the rate. In some market conditions, a SOFR-based or Treasury-based rate could be slightly lower than a Prime-based rate for the same loan.

One thing to know: Loans using the new alternative base rates are not available for secondary market sales initially. This is a technical detail that matters to lenders more than borrowers. But it means some lenders may stick with Prime for now until the secondary market catches up.

What Should You Do Now?

Here is a simple game plan based on these three changes:

  1. Check your ownership structure. If any owner in your business holds a green card instead of U.S. citizenship, you need to act before March 1 or explore other financing options. Talk to an attorney about restructuring if needed.
  2. Do not panic about SBSS going away. Your personal FICO score and your business cash flow matter more now. If your business generates solid revenue and covers its debt, you are in a good position. Focus on clean books and strong bank activity.
  3. Know your DSCR. With the new 1.1x minimum requirement and the shift to commercial credit analysis, lenders will focus on your debt service coverage ratio. Know your number before you apply.
  4. Ask your broker about rate options after March 1. The new SOFR and Treasury base rates could mean slightly different pricing. Your funding advisor can tell you which base rate gives you the best deal.
  5. If you have a pending application, check the timing. Applications submitted before March 1 follow the old rules. If you are in process, confirm with your lender where things stand.

Not sure how these changes affect your situation? That is exactly what we help with. Even if SBA is not the right fit, there are other programs that may work. The key is matching you to the right one.

Frequently Asked Questions

Can green card holders still get SBA loans after March 1, 2026?

No. Starting March 1, 2026, 100% of all direct and indirect owners of an SBA borrower must be U.S. citizens or U.S. nationals residing in the United States. Green card holders (lawful permanent residents) are no longer eligible to own any percentage of a business applying for SBA financing.

What happens to existing SBA loans held by green card holders?

Existing SBA loans are not affected. The new citizenship rules only apply to new applications submitted on or after March 1, 2026. If your loan was already approved under previous rules, it remains in place.

What is the SBSS score and why is it going away?

The SBSS (Small Business Scoring Service) was an automated credit scoring tool that combined personal and business credit data into a single number. The SBA used it to quickly evaluate small loan applications. Starting March 1, 2026, the SBA is discontinuing its use for 7(a) Small Loans. Lenders will shift to traditional commercial credit analysis instead.

Will it be harder to get an SBA loan without the SBSS score?

It depends on your situation. Without the automated SBSS score, lenders will look more closely at your actual financials: cash flow, bank statements, debt service coverage ratio, and working capital. If your business has strong cash flow but had a borderline SBSS score, this change could actually work in your favor. If you relied on a strong SBSS score to offset weak financials, it may be harder.

What are SOFR and Treasury base rates for SBA loans?

Starting March 1, 2026, SBA lenders can use three new base rates in addition to the Prime rate: 30-day SOFR (Secured Overnight Financing Rate), the 5-year Treasury Note rate, and the 10-year Treasury Note rate. The maximum interest rate caps are still tied to Prime. These new options give lenders more flexibility in how they price loans.

Do these changes affect SBA Express loans?

The SBSS score sunset does NOT affect SBA Express loans. Express lenders may continue using SBSS or their own scoring models. However, the citizenship requirements and new base rate options apply to all SBA 7(a) and 504 programs, including Express.

Need Help Navigating These Changes?

We help business owners figure out which programs fit. Even if SBA is not the right fit, there are other options.

Check Your SBA Eligibility