SBA Hot Topic Tuesday: SBA Citizenship Eligibility Standards Effective March 1
by Bob Coleman
Founder & Publisher
A recap of SBA’s Procedural Notice.
Who is eligible
• U.S. Citizens, including individuals born in American territories.
• U.S. Nationals, including individuals born in American Samoa and Swains Island.
• Naturalized citizens with no special restrictions.
Who is not eligible
• Lawful Permanent Residents, including both unconditional and conditional green card holders.
• Individuals under Deferred Action for Childhood Arrivals.
• Any individual who is not a U.S. Citizen or U.S. National.
• Any individual, including U.S. Citizens and U.S. Nationals, whose principal residence is outside the United States, its territories, or possessions.
• Undocumented individuals in the United States.
• Individuals granted asylum.
• Refugees.
• Visa holders and non-immigrant status holders.
• Individuals who are citizens of the People’s Republic of China or Hong Kong.
• Any individual, business concern, or entity on the Office of Foreign Assets Control sanctions list.
• Any business created, organized, or incorporated outside the United States, its territories, or possessions.
Six-Month Lookback Rule
• The Applicant business is ineligible if any direct or indirect owner of the business, beginning 6 months prior to the date of issuance of the SBA loan number, is an Ineligible Person.
• The only exception is if the Ineligible Person completely divests their ownership interest 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.
Supplemental and Limited Guarantors
• When a limited or supplemental guaranty is required by the Lender for approval, or by SBA to support the pledge of jointly held required collateral, an Ineligible Person may provide a limited guaranty. This exception does not apply to undocumented aliens who are in the U.S. illegally.
Effective dates
• Delegated lenders: Applies to all 7(a) and 504 loans approved on or after March 1, 2026.
• Non-delegated lenders: Applies to applications that enter R1 status in E-Tran on or after March 1, 2026.
AI Prompts for Calculating the Collateral Base – Next Meeting for Coleman AI Underwriter Members Today at 12PM ET
Our next Coleman AI SBA Underwriter Membership Teams Meeting will be held on Tuesday, February 17 at 12:00 PM Eastern.
This session will focus on AI prompts for calculating the collateral base for SBA 7(a) loans. Bob Coleman will demonstrate how to structure prompts that classify collateral, apply SBA discount factors, calculate net collateral value, and generate clear, SBA-compliant collateral narratives — all while maintaining full underwriting oversight.
The Coleman AI SBA Underwriter Membership includes:
- Access to the full Coleman AI Prompt Library
- Semi-monthly live Teams meetings (we meet twice each month)
- Ongoing prompt updates aligned with SBA rules and SOP changes
- Practical, step-by-step instruction designed specifically for SBA underwriters
Avoid the Top Ten Equity Injection Mistakes That Put Your SBA Guaranty at Risk — Webinar 2/18
Equity injection documentation continues to be one of the most heavily scrutinized areas in SBA lending. In this webinar, former SBA Little Rock Servicing Center Deputy Director Lance Sexton will explain exactly what reviewers look for, where lenders often go wrong, and how to document equity injection so your files pass SBA and third-party audits without exception.
This training incorporates real SBA review findings and lender audit feedback from across the industry. Participants will walk away with practical, step-by-step guidance that reflects the standards seasoned SBA loan closers use every day. The result: stronger files, fewer compliance issues, and the confidence that your SBA guaranty is fully protected.
Underwriting SBA 7(a) Small Loans After SBSS: What Lenders Must Change by March 1, 2026 — Webinar 2/24
The SBA has changed the underwriting rules for 7(a) Small loans under $350,000. Effective March 1, 2026, the SBA is ending the use of the SBSS score for all 7(a) Small loans and returning to the requirement for documented repayment ability based on cash flow.
The training in this webinar shows how SBA expects underwriters to evaluate files, how to document repayment ability and where lenders can apply common sense judgments without creating SBA denial of guaranty risk.
Coleman Certified SBA 7(a) Loan Underwriting 2026 Training
The Coleman SBA 7(a) Certified Underwriter Training Program enters 2026 following a complete rebuild. The structure is redesigned. The curriculum is expanded. Production quality has been elevated. New instructors have been added. Every element is engineered to help SBA credit professionals master the intricate requirements of producing a defensible, banker-ready credit memo.
The urgency for training has never been higher. SBA credit is entering a new regulatory era. Program guidance continues to shift. SBA has eliminated the “do what you do” rule. SBA, regulators, and credit committees now expect a higher standard of risk assessment and clearer, more disciplined explanations supporting credit approval.
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