Update to SOP 50 10 8 – Revised Applicant Ownership Citizenship and Residency Requirements for 7(a) and 504 Loans.

Summary

SBA Procedural Notice 5000-876626, published February 11, 2026 and effective March 1, 2026, revises SOP 50 10 8 to require that 100% of the direct and indirect owners of a 7(a) or 504 applicant be U.S. Citizens or U.S. Nationals with their principal residence in the United States, its territories or possessions. It replaces Section A, Chapter 1, Paragraph F, the paragraph on businesses owned by non-U.S. citizens. The rule covers delegated loans approved on or after March 1, 2026 and non-delegated applications that enter R1 status in E-Tran on or after that date; applications with Lawful Permanent Resident ownership that reach R1 status by 11:59 PM Eastern on February 28, 2026 will be processed by SBA. Lenders must certify in E-Tran that no owner or guarantor is an "Ineligible Person."

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SBA Procedural Notice

TO: All SBA Employees, 7(a) Lenders and CONTROL NO.: 5000-876626
Certified Development Companies
PUBLICATION: February 11, 2026
SUBJECT: Update to SOP 50 10 8 – Revised
Applicant Ownership Citizenship and Residency EFFECTIVE: March 1, 2026
Requirements for 7(a) and 504 Loans.

The purpose of this notice is to announce that SBA is incorporating into Standard Operating
Procedure (“SOP”) 50 10 8, Lender and Development Company Loan Programs, recent policy
changes issued in SBA Policy Notice 5000-876441, Update to SOP 50 10 8 – Citizenship and
Residency Requirements and Recission of Procedural Notice 5000-872050, the updated policy
requirements that 100% of all direct and/or indirect owners of a small business Applicant be U.S.
Citizens or U.S. Nationals who have their Principal Residence in the United States, its territories,
or possessions.

These changes will apply to all 7(a) and 504 loans approved (i.e., issuance of the SBA loan
number) under delegated procedures on or after March 1, 2026.

These changes will apply to all non-delegated 7(a) and 504 applications that enter R1 status (as
indicated in E-Tran) on or after March 1, 2026. Applications with any Lawful Permanent
Resident (LPR) ownership that receive R1 status in E-Tran on or before 11:59 PM Eastern,
February 28, 2026, will be processed by SBA. Beginning March 1, 2026, only Applications
from businesses with 100% ownership by U.S. Citizens or U.S. Nationals are eligible.

SOP 50 10 8 Revisions
The revisions to SOP 50 10 8 are as follows:

a. Section A, Ch. 1, Para. F. (pages 27 through 31): The heading and current content of
Paragraph F. “BUSINESSES OWNED BY NON-U.S. CITIZENS” are deleted and replaced
with the following:

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“F. CITIZENSHIP AND RESIDENCY REQUIREMENTS

SBA financing is limited to business Applicants with 100% direct and/or indirect owners
and SBA-required guarantors, all of whom must be U.S. Citizens or U.S. Nationals who
have their Principal Residence in the United States, its territories, or possessions. All
entity owners (whether direct or indirect) must be created, organized, or incorporated in
the United States, its territories, or possessions.

For any loan, SBA Lenders must certify in E-Tran that, to the best of their knowledge, no
direct or indirect owner or SBA-required guarantor is an “Ineligible Person” as defined in
Appendix 3 of this SOP. No loan may be made if any direct or indirect owner or SBA-
required guarantor is an Ineligible Person.

Direct/Indirect Owners: If a direct or indirect owner is an Ineligible Person, the business
is ineligible unless the Ineligible Person completely divests their ownership prior to the
date of issuance of the SBA loan number. Undocumented aliens who are in the U.S.
illegally may not be an officer, director or employee of the Applicant business.

Six-month lookback: The Applicant business is ineligible if any direct or indirect owner
of the business commencing 6 months prior to the date of issuance of the SBA loan
number is an Ineligible Person, unless the Ineligible Person completely divests their
ownership interest prior to the date of issuance of the SBA loan number.

Guarantors (including Supplemental and Limited Guarantors): If any SBA-required
guarantor (including an OC for a project structured as an EPC/OC), including direct and
indirect owners, are Ineligible Persons, the Applicant is ineligible, with the following
exception for limited or supplemental guaranties. When a limited or supplemental
guaranty is required by the Lender for their approval, or by SBA to support the pledge of
jointly held required collateral, an Ineligible Person (except for undocumented aliens who
are in the U.S. illegally) may provide a limited guaranty.

When the applicant business has other businesses that report their taxes on the Applicant
business’s tax returns, all the businesses on the tax return are subject to these
requirements. However, affiliate businesses and partially owned subsidiaries that do not
report their taxes on the Applicant business’s tax returns are not subject to these
requirements.

For servicing requests (e.g., substitution of an owner or SBA-required guarantor), the
new individual may not be an Ineligible Person.

Eligible Persons: The following categories of individuals are eligible for SBA financing:

1. U.S. Citizens - Citizens born in an American territory: Generally, those born in an
American territory are U.S. citizens. This includes but is not limited to the fifty U.S.
states, the District of Columbia, Guam, Puerto Rico, the Commonwealth of the
Northern Mariana Islands, and the U.S. Virgin Islands, but does not include outlying
possessions of the United States (i.e., American Samoa and Swains Island).

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2. U.S. Nationals - People born in American Samoa and Swains Island are
considered U.S. Nationals at birth but are not automatically U.S. citizens. 8 U.S.C. §
1408 and 8 U.S.C. § 1101(a)(29). When making a loan to a business owned by a non-
citizen U.S. National, the SBA Lender must document in the loan file that the SBA
Lender has reviewed evidence of the person’s status as a U.S. National (e.g., birth
certificate or passport) and must enter the U.S. National’s Social Security Number on
the application and into E-Tran.

3. Naturalized Citizens - Businesses owned by Naturalized Citizens are eligible, and
the naturalized citizens are not subject to any special restrictions or requirements. No
further verification of status is required if an individual is reflected as a U.S. Citizen
on the SBA application.

Documenting Applicants’ Eligibility: The SBA Lender must enter into E-Tran 100% of
the Applicant’s direct and indirect owners, which includes entity and individual owners
with direct or indirect ownership. SBA Lenders must also follow this process for
guarantors and for servicing actions (e.g., for requests to substitute an owner or SBA-
required guarantor). The ownership percentage of married spouses and minor children
must be combined.”

b. Section B, Ch. 1, Para. D.1.n. (page 147), (Contents of Lender’s Application for Guaranty for
Standard 7(a) loans); Section B, Ch. 2, Para. D.1.b.ii.h) (page 185) (Contents of Lender’s
Application for Guaranty for 7(a) Small loans); Section B, Ch. 3, Para. D.1.c.xi. (page 214)
(Contents of Lender’s Application for Guaranty for CAPLine loans); Section B, Ch. 4, Para.
B.6.a.xv. (page 271) (Contents of Lender’s Application for Guaranty for Export Working
Capital Program (EWCP) loans); and Section B, Ch. 4, Para. C5.a.iii.l)ix) (pages 309 and
310) (Contents of Lender’s Application for Guaranty for International Trade loans), are
revised to read as follows:

“Documentation of U.S. National in accordance with Section A, Ch. 1, Para. F.2,
“Citizenship and Residency Requirements”. Lenders must receive verification of the
status of each U.S. National. Lender must document their findings of the review proving
a U.S. National’s status (birth certificate and/or passport) in the loan file, and enter the
U.S. National’s Social Security Number on the Application in E-Tran.”

c. Section B, Ch. 2, Para. D.1.c.ii.g) (page 186) (Contents of Lender’s Application for Guaranty
for SBA Express loans); and Section B, Ch. 4, Para. A.5a.j) (page 252) (Contents of Lender’s
Application for Guaranty for Export Express loans), are revised to read as follows:

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d. Section C, Ch. 1, Para. F.2.a.xxi. (page 368) is revised to read as follows:

“Documentation of U.S. National in accordance with Section A, Ch. 1, Para. F.2,
“Citizenship and Residency Requirements”. CDCs must receive verification of the status
of each U.S. National. CDC must document their findings of the review proving a U.S.
National’s status (birth certificate and/or passport) in the loan file, and enter the U.S.
National’s Social Security Number on the Application in E-Tran.”

e. Appendix 3: Definitions – Ineligible Person (page 406): The definition of Ineligible Person
is deleted and replaced with the following:

“Ineligible Person: An Ineligible Person includes, but is not limited to:

1. Undocumented aliens who are in the U.S. illegally;

2. An individual granted asylum, a refugee, a visa holder, a non-immigrant alien under 8
U.S.C. § 1101(a)(15), or those under Deferred Action for Childhood Arrivals (DACA);

3. An individual, including a visa holder, who is not a U.S. Citizen, or U.S. National (non-
resident aliens);

4. An individual (including U.S. Citizens and U.S. Nationals) who has their Principal
Residence outside of the United States, its territories, or possessions;

5. A business concern or entity that was created, organized, or incorporated outside of the
United States, its territories, or possessions;

6. An individual who is a citizen of the People’s Republic of China, or the Special
Administrative Region of Hong Kong;

7. A Lawful Permanent Resident (LPRs) (commonly referred to as “green card holders”),
including individuals with permanent (Unconditional) LPR status, and Conditional LPR
status;

8. An individual, business concern, or entity on the Office of Foreign Assets Control
(OFAC) sanctions list. See Paragraph J of this Chapter.”

f. Appendix 3: Definitions – Principal Residence (page 409): The definition for “Principal
Residence” is added as follows:

Principal Residence: Principal Residence is defined by IRS Publication 523.

SBA Forms 1919 and 1244

g. New Applicant Certifications:

SBA is in the process of updating SBA Form 1919, “SBA 7(a) Borrower Information Form”, and
SBA Form 1244, “SBA 504 Borrower Information Form.” Until these updated forms are

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available, SBA Lenders must collect all required information and certifications and retain them
in the loan file. The certifications below will be added to the updated SBA Form 1919 and SBA
Form 1244. Until the updated forms are published, the SBA Lender must attach the certifications
below as a supplement to the application to be signed by the Applicant.

“The Applicant must certify to the following:

• I certify that none of the direct and indirect owners of the Applicant, OC, and EPC, and
all SBA-required guarantors, including entities of the Applicant, OC, and EPC, are
Ineligible Persons. An Ineligible Person includes but is not limited to: 1. Undocumented
aliens who are in the U.S. illegally; 2. An individual granted asylum, refugees, visa
holders, nonimmigrant aliens under 8 U.S.C. § 1101(a)(15), or those under Deferred
Action for Childhood Arrivals (DACA); 3. An individual, including a visa holder, who is
not a U.S. Citizen, or U.S. National (non-resident aliens); 4. An individual (including
U.S. Citizens, and U.S. Nationals) who has their Principal Residence outside of the
United States, its territories, or possessions; 5. A business concern or entity that was
created, organized, or incorporated outside of the United States, its territories, or
possessions; 6. An individual who is a citizen of the People’s Republic of China, or the
Special Administrative Region of Hong Kong; 7. A Lawful Permanent Resident (LPRs)
(commonly referred to as “green card holders”), including individuals with permanent
(Unconditional) LPR status, and Conditional LPR status; or 8. An individual, business
concern, or entity on the Office of Foreign Assets Control (OFAC) sanctions list (see
SOP 50 10).

• I certify that all direct and indirect owners of the Applicant(s) and OC(s), and all SBA-
required guarantors, are U.S. Citizens or U.S. Nationals that have a principal residence
(as given the meaning of principal residence in IRS publication 523) in the United States,
its territories, or possessions; and all entity owners and guarantors were created,
organized, or incorporated in the United States, its territories, or possessions.”

Questions:
Questions concerning this Notice may be directed to the Lender Relations Specialist in the
local SBA Field Office.

Thomas Kimsey
Associate Administrator
Office of Capital Access

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Must be accompanied by SBA Form 58

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