The U.S. Small Business Administration (SBA) lending landscape is in a state of constant flux. 2025 was no exception, with the SBA implementing several important rule and procedural changes during the first year under a new administration.

For commercial real estate lenders, and particularly those that originate (or participate in) SBA loans, it’s important to stay abreast of all the latest updates to Standard Operating Procedures and current areas of audit focus. In this article, we recap the most significant SBA actions from the past year, and share where you need to focus your risk management efforts in 2026.

SBA made significant changes in 2025

In one of the first moves under the SBA’s new leadership, the Administration officially shifted responsibility for environmental review in certain programs (notably 504 loans) to Certified Development Companies (CDCs). Procedural Notice 5000‑866054 (effective March 20, 2025), states that the revised guidance applies to non‑delegated processing and signals that CDCs (and their underwriting/compliance teams) must now carry the environmental risk burden. Critically, this means that while the third‑party lender may not physically perform the review, you must verify the CDC or sponsor did so—and that the file includes the required environmental documentation before closing.

Next, the SBA released its latest version of its Standard Operating Procedure for SBA loan origination (SOP 50 10 8), introducing notable changes to how the SBA would treat environmental reviews for both 7(a) and 504 loans going forward. Key provisions of the SOP, effective June 1, 2025, include:

• Explicit notification that failure to comply with the environmental provisions “may result in a denial of SBA’s guaranty.”
• A centralized documentation and submission process that includes uploads via E‑Tran and notifications via dedicated email channels.
• Clarification that environmental reports must now be dated within one year of issuance of the SBA loan number.

Lastly, the SBA released an updated SOP 50 57 4 for 7(a) loan servicing and liquidation, effective November 1, 2025. Key features include:

• An increase, from $5,000 to $10,000 to the personal property liquidation value threshold for certain actions.
• The addition of a new loan status category, “SBA Uncollectible,” that triggers referral to Treasury collection.
• Revisions to align with environmental review requirements in SOP 50 10 8.

Exam tightening in 2026

While we don’t expect to see additional major procedural updates released this year, we do anticipate that the SBA will continue down the path of tightening its examination and review processes.

Now that the dust has settled on 2025’s SOP updates, lenders can expect a greater focus on environmental compliance in SBA audits. With a looming debt “maturity wall” that’s anticipated to peak at $1.26 trillion in 2027, the SBA has signaled that it’s concerned about lenders’ capacity to handle spikes in liquidation and foreclosures, particularly if they don’t adhere to proper environmental due diligence procedures. Overall foreclosure filings among all property types (residential and commercial) jumped 14% in 2025 over 2024, although this level is still well below historic highs.

Given these market trends and the tightening of due diligence requirements in both the origination and liquidation stages of SBA lending, lenders should anticipate that the SBA will apply greater scrutiny on environmental files in both SBA audits and guaranty purchase reviews. Missing or weak environmental documentation could trigger guaranty denial or require lender indemnification.

For lenders, this is no time to be complacent. If you lack confidence in your SBA lending policies, procedures, and practices, we recommend contacting a reputable outsourced risk management firm with the experience and expertise to help you shore up your environmental program.

To date, we haven’t heard the SBA is handing out significant penalties for non-compliance with environmental policies, yet. But do you want risk being the canary in the proverbial coal mine?

ORMS is ready to support your growth

On the good news front, the commercial real estate market is expected to heat up in 2026, with investment activity forecasted to increase by 16% over 2025, approaching pre-pandemic levels.

ORMS has been gearing up to help you take advantage of what’s anticipated to be an exciting, and hopefully successful 2026 for CRE lenders. We recognize that with origination volumes increasing and several of our clients experiencing mergers & acquisition (M&A) activity, you need more help and support from ORMS than ever before.

With this goal in mind, we spent the second half of 2025 adding several skilled, experienced staff to our environmental risk management team. We’re ready to help, and we’re here to support your growth goals with our proven environmental due diligence expertise and resources.

Bottom line, ORMS is here for the long term, and we’re excited to support our current and future clients with all the risk management expertise, resources, and support you need. We’re committed to helping you originate your SBA and conventional loans the right way, so you can sleep at night knowing that your loan collateral and SBA guaranties are safe.