SBA Approvals Fell 28% in 2026. Small Borrowers Felt It Most

Why small-dollar SBA loans are getting harder to find

SBA loan requirements in 2026 got noticeably tighter: the SBA approved 56,130 7(a) loans totaling $32.43 billion, down about 28% by loan count from the year before. Total dollars fell only 13% — the program didn't shrink evenly. It shrank from the bottom, and borrowers seeking smaller loans faced the toughest odds in years.

If you're thinking about an SBA loan in 2026 or 2027, here's what the data shows and what changed on October 1.

What do the FY2026 numbers actually show?

The SBA's fiscal year ended September 30, and the figures are now public. In fiscal 2025 the agency approved roughly 78,000 7(a) loans for about $37.3 billion. In fiscal 2026: 56,130 loans for $32.43 billion — roughly 22,000 loans that existed one year and didn't the next (American Banker, via Cobalt Intelligence).

• The average approved 7(a) loan rose from about $478,000 to about $578,000, up roughly 21% in a single year. When loan count falls much faster than dollars, the missing loans were disproportionately the small ones.
• Approvals of $150,000 or less fell 39.9% by count through the first nine months of FY2026 — exactly the range where online term lenders and revenue-based funders compete for the same borrowers (Cobalt Intelligence analysis).
• Approvals between $350,000 and $500,000 fell 64.3% over the same period.

The missing ~22,000 loans were disproportionately the small ones: approvals of $150,000 or less fell 39.9%.

Are SBA loans harder to get now?

For smaller requests, yes, measurably. A 40% drop in sub-$150,000 approvals is not a mood. It's a door closing.

The contraction wasn't universal. M&T Bank approved 2,975 7(a) loans totaling $326.4 million in fiscal 2026, a company record and about 10% growth, climbing to fifth nationally among SBA lenders. Some lenders leaned in while the program overall pulled back (M&T Bank via PR Newswire).

Who writes the paper matters. By approved dollars, Live Oak Bank led the country at $2.58 billion across 2,411 loans, averaging over a million per deal. By loan count, Newtek Bank led with 5,035 loans for $1.38 billion, averaging closer to $274,000. Same leaderboard, nearly opposite books — when someone tells you a bank is the biggest SBA lender, ask which measure they mean, because the answer tells you whether that lender wants your deal (Tomasz Felpel, Medium).

What changed on October 1?

SOP 50 10 8.1 took effect October 1, 2026, and it tightened the program further. Two changes matter most for borrowers:

• Higher cash-flow coverage requirements for most change-of-ownership loans. Buying a business with SBA financing now requires clearing a tougher debt-service bar.
• Quality-of-earnings reports for acquisitions of $3 million or more. An extra layer of diligence, an extra cost, an extra few weeks.

The practical effect: more documentation, longer timelines, and more small borrowers likely to leave the SBA process without a loan. Fewer SBA-financed business sales also means owners planning an exit may see fewer qualified buyers.

What should a borrower do about it?

First, be honest about fit. SBA loans remain the cheapest long-term capital available to small businesses, with partial government guarantees (typically 75 to 85%) that let lenders stretch further. If you have two-plus years in business, solid cash flow, and time, the program is still worth pursuing.

But go in clear-eyed:

1. Start earlier than you think. Between documentation and the new requirements, six months from application to funding is realistic, not pessimistic.
2. Match the lender to your deal size. A lender averaging $1M+ per loan is not set up for your $200,000 request. Ask about their average deal before you apply.
3. Have a parallel path. If the SBA process stalls, or your request sits in the size range the program just abandoned, conventional term loans, lines of credit, and revenue-based options don't require waiting on a government timeline.

That third point is where a multi-product approach earns its keep. FortisFi works across 18 financing products, including SBA loans through partner lenders, so one application can be matched to the structure that actually fits instead of forcing every deal through a single program. When the SBA is the right answer, we say so. When it isn't, you find out in days, not months.

Key Takeaways

• The SBA approved 28% fewer 7(a) loans in FY2026, and the missing loans were disproportionately the small ones — sub-$150,000 approvals fell nearly 40%.
• SOP 50 10 8.1 (effective October 1, 2026) added cash-flow coverage and quality-of-earnings hurdles, especially for business acquisitions.
• Match the lender to your deal size, start six months earlier than feels necessary, and keep a parallel financing path ready.

Ready to find the structure that actually fits your business? Apply with FortisFi

This post is for informational purposes only and is not financial, legal, or tax advice. Financing decisions should be made with a qualified professional. FortisFi, LLC connects business owners with traditional and non-traditional capital; it is not a lender and does not make financing decisions.