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COLEMAN: Small Business Lender News of the Day for Tuesday, September 30, 2025

September 30, 2025

Michigan Business Network

BA Hot Topic Tuesday: SOP 50 57 4: Effective November 1, 2025 — What Lenders Must Know

by Bob Coleman

Founder & Publisher

On Friday, SBA issued SOP 50 57 4, 7(a) Loan Servicing and Liquidation, effective November 1, 2025. Until October 31, 2025, lenders must continue using SOP 50 57 3.1. This update is more than a renumbering: it clarifies policies, expands definitions, and increases oversight to keep lender practices aligned with prudent standards.

Key Updates from the Notice

According to the SBA Information Notice, SOP 50 57 4 makes several important procedural adjustments:

Definitions: Expanded and updated for clarity, including codification of Seasoned Loan, Prudent Liquidation Deadline, and Financial Hardship.
Liquidation Value Threshold: The personal property threshold requiring SBA involvement has increased from $5,000 to $10,000, easing smaller disposition decisions.
Servicing Centers: Reflects the closure of the Little Rock CLSC. All 7(a) loans are now serviced out of Fresno, CA or the National Guaranty Purchase Center in Herndon, VA.
PPP Records: Adds explicit PPP loan record retention requirements, emphasizing documentation and audit readiness.
Annual Service Fees: Clarifies timing and process for SBA Lenders’ fee payments.
New Status: Introduces “SBA Uncollectible” when SBA has exhausted collection and accounts are ready for Treasury referral.
Alignment: Incorporates revisions from SOP 50 10 and Notice 5000-866946 on guaranty purchase and servicing actions.
Citizenship Requirements: Reaffirms that new obligors must meet SBA citizenship standards consistent with SOP 50 10.

Broader Policy Enhancements

Building on these notice-driven changes, SOP 50 57 4 strengthens lender accountability:

Prudent Liquidation Deadline: Lenders must liquidate within 24 months of guaranty purchase, unless extended. Missed deadlines can trigger repairs or denials.
Environmental Standards: Now require reliance letters and documented professional standards before SBA approval of actions on contaminated property.
Litigation & Expenses: More detailed litigation plan templates and stricter cost recovery categories.
Inspector General Referrals: Broadened to include both lender and SBA employee misconduct.
Reporting: A wrap-up report is required within 30 days of liquidation completion, with referral to Treasury and IRS 1099-C guidance.

Bottom Line

SOP 50 57 4 reflects SBA’s continued shift toward tighter timelines, updated definitions, and centralized oversight. Lenders should update internal processes now—particularly around liquidation deadlines, environmental compliance, PPP records, and servicing center contacts—to ensure compliance and avoid costly denials or repairs.

Get Your Team Trained: Coleman is offering two timely webinars to help institutions prepare for SOP 50 57 4—Oct 8 for your Servicing & Liquidation team, and Oct 30 for your SBA leadership. What makes these sessions unique is the instructor: Lance Sexton, Coleman’s long-time SBA training expert and former Deputy Director of SBA’s Little Rock Servicing Center. Lance brings both the insider SBA perspective and practical, lender-side application. That blend is why Coleman training consistently stands apart—clear explanations, real-world examples, and actionable steps your team can implement the very next day.

Get Ready for SOP 50 57 4 with Coleman Training

The SBA’s new SOP 50 57 4 goes into effect November 1, 2025. With major changes to liquidation deadlines, servicing standards, PPP record retention, and lender liability, now is the time to make sure your team is ready.

Coleman has you covered with two targeted webinars:

What sets Coleman training apart? Lance Sexton, Coleman’s SBA training expert and former Deputy Director of SBA’s Little Rock Servicing Center, leads both sessions. Lance has walked in your shoes and sat on SBA’s side of the table—bringing a rare dual perspective. He knows where lenders trip up, how SBA evaluates servicing and liquidation decisions, and what practical steps protect the guaranty.

Coleman’s webinars go beyond reading rules. They deliver clear explanations, real-world examples, and lender-focused strategies your team can use immediately. Don’t wait until November to adjust—get ahead of the curve with Coleman’s trusted training.

Avoid the Top Ten Equity Injection Mistakes That Put Your SBA Guaranty at Risk — Webinar 10/22

Equity injection documentation continues to be one of the most heavily scrutinized areas in SBA lending. Examiners, reviewers, and auditors consistently flag the same issues, and lenders who fail to meet the SBA’s exact requirements risk repairs or denials of their guaranty.

In this webinar, former SBA Little Rock Servicing Center Deputy Director Lance Sexton provides an industry-level presentation on equity injection compliance. Lance will cover 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.