SBA is Sunsetting the SBSS Score – Now What?

Effective March 1st, 2026, SBA will no longer allow the use of FICO®’s Small Business Scoring Service to screen 7(a) small loans (loans up to $350,000).

Instead – as has been an observable trend for over a year now – SBA is re-emphasizing that Lenders must return to traditional commercial credit analysis in alignment with how their non-SBA commercial loans are evaluated and underwritten, as outlined in the SBA SOP 50 10 8.

The update to SBA SOP 50 10 8 emphasizes that Lenders should follow “appropriate and prudent” credit analysis, instead of relying on a single numerical score. Instead, Lenders must now make credit decisions using credit analysis processes consistent with their similarly-sized, non-SBA commercial loans – a key component of ongoing SBA compliance.

Under these new rules, your credit memo should include:

• A thorough analysis of all parties’ credit history (i.e., not only the applicant’s!);

• A Debt Service Coverage Ratio of at least 1.10:1 – historical and projected;

• Cash flow analysis based on EBITDA, with allowable adjustments;

• Demonstration of repayment ability;

• Explanation of why credit isn’t available elsewhere.

The credit memo tells the story. If it’s missing key facts, SBA may reasonably conclude they never happened.

Are there some instances where credit scoring models are still allowed?

Yes – but be careful!

Lenders may use internal scoring models only if the model is:

• Approved by the Lender’s primary federal regulator;

• Used for similarly-sized non-SBA commercial loans;

• Doesn’t rely on consumer credit scores;

• Does not replace traditional underwriting;

• Documented in the loan file and on ETran;

Are there exceptions?

Yes.

• SBA Express loans may continue using approved scoring models;

• Small Business Lending Companies that do not make non-SBA loans may continue using credit scoring models – as long as they’re reviewed annually and approved by SBA.

What should you do?

Update your credit memo template to require explicit documentation of key information, as described above. Mandatory narrative sections (versus checkboxes) will help support defensible SBA compliance.

Review and update your processes, procedures, and checklists to remove references to SBSS scoring and align them with SBA SOP 50 10 and this change.

Make sure you have clear underwriting standards aligned with your non-SBA commercial lending policies.

If you choose to use internal scoring models, check and double-check to ensure you’ve received appropriate SBA approval.

And review your pre-approval and post-closing processes; consider including second-level credit reviews and internal audits for credit memo completeness.

How can we help?

You know we love defined policies, procedures, and checklists – and that stay current on SBA SOPs and Procedural Notices.

As an experience SBA Lender service provider, we’re here to help you identify what needs to be updated to support strong SBA compliance.

And our SBA Lender training can bring your team up to speed on these changes, so your people are confidently ready to support your Borrowers going forward.

Give us a call at 877-576-0819, or drop us a line here.