NEW ORLEANS – A major federal overhaul, coupled with substantial changes to SBA lending regulations, is reshaping how small business owners secure financing. While the “One Big Beautiful Bill” (OBBB) Act offers tax breaks that could boost small‑business investment, its projected trillions in added deficits may drive up interest rates, making loans more costly and harder to obtain.
Commercial finance firm, Cardinal Capital, is calling on borrowers and lenders to prepare for the shift. According to Rob Powell, Partner and Chief Marketing Officer of Cardinal Capital, the OBBB Act includes provisions that directly affect two of the Small Business Administration’s main lending programs—the 7(a) program, which provides general business loans, and the 504 program, which finances major fixed assets—bringing them in line with updated SBA rules that took effect June 1, 2025.
The Bad News
“This isn’t just fine print. It’s a revision of some components of the SBA lending playbook,” said Powell. “We’re already seeing deals delayed, declined, or restructured—and many borrowers and lenders don’t realize the impact.”
In addition, the bill’s projected $2.5 to $3+ trillion increase in federal deficits over the next decade is expected to put upward pressure on interest rates. Some advocates contend that while the tax breaks may help certain businesses on the revenue side, the higher interest rate environment and rising costs could offset or even outweigh those benefits, especially for smaller or newer enterprises.
Powell says that the following are among the most notable changes:
- The minimum SBSS credit score required for SBA loans has increased from 155 to 165.
- SBA guarantee fees are back, raising borrowing costs.
- Hazard insurance is now required for loans over $50,000, a dramatic drop from the prior $500,000 threshold.
- Seller-financing with retained equity now requires a two-year personal guarantee from the seller.
- Lenders must now use SBA-standard underwriting—eliminating the flexible “do-what-you-do” method used previously.
- CPA-reviewed financials may be required in lieu of tax returns for certain acquisitions.
“These updates are designed to reduce SBA loan risk, but they also make it harder for some borrowers to qualify or close deals efficiently,” Powell said. “That’s why experienced navigation matters more than ever.”
The Good News
According to Powell, there are several undeniable upsides to the changes, especially for borrowers who are well-prepared and for those who know how to navigate the new terrain. Powell outlines the positives here and explains they they’re good:
More Flexibility in Deal Structures
Stock-based acquisitions are now encouraged, including partial ownership deals. This opens the door for more creative M&A strategies.
Allows non-traditional buyers (e.g., employees, management teams) to structure thoughtful transitions that wouldn’t have been possible before.
Why It’s Good: More ways to structure deals = more opportunities for ownership and succession planning.
Seller Financing Still in Play—with Guardrails
Seller financing isn’t dead—it just requires a two-year personal guarantee if the seller retains equity.
Why it’s good: It brings clarity and consistency to deals that involve seller rollover equity, which were previously handled inconsistently across lenders.
Expanded Acceptance of CPA-Prepared Financials
CPA-reviewed or prepared financials are now accepted instead of tax returns in many scenarios.
Why it’s good: This benefits borrowers with clean, accrual-based books but complicated or tax-strategic filings. It also helps fast-growing companies who may not show strong taxable income yet.
Clearer Standards = Less Ambiguity
Standardized underwriting removes the confusing “do-what-you-do” clause and forces lenders to apply consistent evaluation practices.
Why it’s good: It levels the playing field across lenders and gives borrowers a more predictable loan process—especially when working with an advisor who understands the new playbook.
Focus on Stronger, More Sustainable Deals
The increase in SBSS score and tighter eligibility guidelines are designed to reduce defaults and build a healthier SBA portfolio.
Why it’s good: Over time, this means more trust in the SBA system, potentially lower guarantee fees in the future, and more institutional support for lending programs.
Franchise and NAICS-Aligned Acquisitions Get a Boost
Lenders anticipate higher volume in same-industry acquisitions and franchise deals, which tend to score better under the new risk models.
Why it’s good: Entrepreneurs looking to buy into known verticals—especially with a track record—may find SBA capital more available than before.
It Rewards Prepared Borrowers
Borrowers who take the time to prepare clean financials, understand their credit, and structure deals thoughtfully are better positioned to succeed.
Why it’s good: This separates serious buyers from opportunistic ones and rewards smart planning—especially when supported by a firm like Cardinal Capital.
Ultimately, the new rules create a lending environment that favors well-prepared borrowers and strategic deals, making informed guidance essential for small business owners aiming to secure capital in the post‑OBBB landscape.
About Cardinal Capital
Cardinal Capital is a commercial finance advisory firm based in Baton Rouge, Louisiana, serving clients nationwide. Known for its sharp strategy, subject-matter expertise, and get-it-done approach, the firm specializes in SBA lending, business acquisition financing, and non-bank lending solutions that meet clients where they are—and take them where they want to go.
