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Quick Tip: Additional SBA Guidance on Required Exceptions for Lease Terms

Hello Andrew,

How do lenders handle new requirements in the SOP for borrowers in leased space with lease terms that end before the term of the loan?

Historically the SBA only required an assignment of lease and landlord waiver which included a subsection for the lease term to be for the term of the loan. 

The SOP 50 10 6 included language that “If the SBA Lender is unable to obtain the assignment of lease or landlord’s waiver, SBA Lender must document its file with the attempt to obtain the assignment and the landlord’s reason(s) for not providing it.” (SOP 50 10 6 pg 167).


Now the SOP includes a section separate from the assignment of lease and landlord waiver that indicates “The lease term, including renewal options exercisable only by the Borrower, must equal or exceed the term of the loan.” (SOP 50 10 7.1 pg 37). If the borrower operates in leased space where the lease term is not the term of the loan, it will require an exception to policy in order to receive SBA approval.


Below is feedback our team received directly from the SBA:

"SOP 50 10 7.1 states that for both 7(a) and 504 loans, when the Borrower is operating in leased space, the lease term, including renewal options exercisable only by the Borrower, must equal or exceed the term of the loan.

SBA is aware that this requirement is causing unintended difficulties for Borrowers operating in leased space, and SBA Lenders need instructions on requesting exceptions to this policy.

SBA is currently working on a Procedural Notice that will modify these requirements; however, it may be several weeks before the Notice is published.

In the interim:

7(a) Lenders requesting an exception to this policy may send an email to me at [email protected]

CDCs requesting an exception to this policy for 504 loans may send an email to Linda Reilly at [email protected].

Linda and I will waive the lease requirement on a loan-by-loan basis."

We are working on behalf of all our clients to ensure they are fully compliant with the latest requirements while maximizing their ability to close loans through the end of 2023.

Should your institution need SBA loan underwriting support to navigate the latest requirements of the SOP, please contact us using the link below.

Outsourced Underwriting from Windsor Advantage

Underwriting services from Windsor Advantage enable lending institutions with the expertise, infrastructure, and competitive edge to succeed in the SBA lending space. 

Underwriting clients at Windsor Advantage have a fully staffed, fully compliant SBA team on demand to facilitate immediate growth in the world of SBA lending.

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Our mission is to equip your organization with the resources and support needed to succeed in the SBA landscape with maximum efficiency. 

Please reach out to us at any time to learn more about SBA loan underwriting support and outsourcing from Windsor Advantage.

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