What is the SBA 7(a) lending target for FY 2027?

The SBA FY 2027 Congressional Budget Justification sets a $40 billion 7(a) lending target, up from $35.5 billion in FY 2026 and well above the $37.3 billion actual in FY 2025. The 7(a) program has exceeded its own target in each of the last two fiscal years (111% in FY 2024, 113% in FY 2025), so the $40B number is more reactive to demand than aspirational.

Will SBA loan fees increase in 2026 or 2027?

The FY 2027 budget proposes new administrative fees on lenders participating in the 7(a), 504, and SBIC programs. If Congress authorizes the fee, lenders will almost certainly pass some portion through to borrowers as wider rate spreads or additional charges starting October 1, 2026. The proposal requires standalone legislation and has already drawn Senate Democratic opposition, so treat it as a risk to stress-test rather than a certainty.

What is the proposed $10 million SBA loan cap for manufacturers?

H.R. 3174, the Made in America Manufacturing Finance Act, would double the SBA 7(a) and 504 loan cap from $5 million to $10 million for small manufacturers in NAICS sectors 31-33. The bill passed the U.S. House unanimously in December 2025 and is currently in the Senate Finance Committee. Of all the FY 2027 budget proposals, this one has the highest likelihood of becoming law.

What does decoupling 7(a) and 504 loan limits mean for buyers?

UPDATE (May 2026): This proposal is now confirmed. The SBA announced on May 18, 2026 that the combined 7(a) and 504 loan limit doubles from $5 million to $10 million, effective July 4, 2026. The programs are now fully decoupled - borrowers can access up to $5M through 7(a) and $5M through 504 independently, without one counting against the other. For acquisitions that include both an operating business and real estate, this roughly doubles available SBA-backed capital. See our full analysis: SBA Doubles the Combined 7(a) and 504 Loan Limit to $10M.

Why is SBA underwriting tighter in 2026?

Three forces are tightening SBA 7(a) credit right now. First, SBA-prescribed underwriting criteria replaced the looser "Do What You Do" standard in April 2025. Second, the 2023-2024 loan vintage was flagged by the SBA Inspector General as a latent portfolio risk, causing lenders to tighten new originations to offset expected losses. Third, Lender Risk Reviews are running at 180% of target (1,353 reviews in FY 2025 against a goal of 750), pushing PLP lenders to protect their delegated authority with more conservative credit decisions.

Is the SBA 7(a) program funded by taxpayers?

No. The 7(a) program is statutorily required to operate at zero subsidy, meaning loan losses are covered by lender and borrower fees rather than taxpayer appropriations. FY 2024 was the first negative cash flow year in over a decade (approximately -$397 million), driven by eliminated lender fees and looser underwriting. FY 2025 reversed those changes, and the FY 2027 budget proposes new administrative fees on lenders to keep the program self-funding going forward.

SBA FY 2027 Budget: $40B Target, 67% Agency Cut - Buyer Impact

Technical blueprint-style elevation of a classical government agency building representing the SBA FY 2027 budget analysis

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Daniel Giles

Founder & CEO

Daniel Giles spent 18 months searching to acquire a business in Metro Atlanta - and learned the hard way how broken the system is in small business M&A. A Yale MBA, he navigated SBA financing, vetted providers, and survived two deals that collapsed in due diligence. He founded VerSquare to build the trust infrastructure for small business M&A - connecting provider reviews, loan data, and vetted professionals to bring real transparency and drive better deal outcomes.

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The SBA FY 2027 Budget: What Business Acquirers Actually Need to Know

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