A Significant Shift in SBA Small Loan Underwriting
The Small Business Administration (SBA) announced it will discontinue the required use of the FICO Small Business Scoring Service (SBSS) for 7(a) Small Loans effective March 1, 2026. This marks one of the most notable changes to SBA loan underwriting procedures in recent years.
Under Procedural Notice 5000-875701, lenders will no longer be required to prescreen 7(a) Small Loan applications (loans at or below $350,000) using the SBSS score. According to the SBA, this change is designed “to enable lenders to use their existing scoring models and streamline the delivery of small-dollar lending to their customers.”
For lenders, loan processors, and credit risk teams, this regulatory shift presents both opportunities and operational questions worth addressing now.
What the SBSS Sunset Means for Lenders
The Requirement Is Gone, But SBSS Isn’t
The SBA’s decision removes a prescreening mandate—not the SBSS scoring model itself. Lenders remain free to use SBSS in their underwriting, and many industry observers expect most lenders will continue doing so.
As the National Association of Government Guaranteed Lenders (NAGGL) noted in recent communications, the SBSS model “has been validated and tested based on SBA loan performance, and the Agency has indicated its strong confidence in it as a tool for determining creditworthiness for 7(a) small loans.”
For regulated lenders operating in a highly scrutinized environment, switching away from a proven scoring model represents additional risk. The safe path for many will be to maintain existing workflows, at least initially.
New Flexibility in Credit Decisioning
That said, this change opens the door for lenders to evaluate alternative approaches. Teams that have developed robust internal scoring models or those looking to incorporate additional data streams now have more latitude in how they structure their small loan underwriting.
The SBA has indicated it will publish additional guidance outlining parameters for the use of alternative loan scoring models. Lenders should monitor these updates and evaluate whether adjustments to their decisioning processes make sense for their portfolios and risk appetites.
Key Considerations for Adapting Your Operations
1. Audit Your Current Workflow
If SBSS prescreening is embedded in your loan origination system, consider whether you want to maintain it. Questions to address include how SBSS results inform your approval thresholds, what additional data points you currently collect alongside SBSS, and whether removing SBSS would require recalibrating your risk models.
2. Evaluate Your Data Strategy
With the prescreening requirement lifted, lenders have more flexibility to build credit packages tailored to their underwriting philosophy. This might include layering additional consumer credit data, business credit reports from multiple bureaus, income verification, or public records into your decisioning mix.
3. Document Your Policies
Regardless of which scoring approach you adopt, maintain clear documentation of your credit decisioning criteria. Regulatory defensibility depends on consistent, auditable processes—and that expectation hasn’t changed.
4. Watch for Updated SBA Guidance
The SBA has announced training on the SBSS sunset and plans to publish a Procedural Notice outlining parameters for alternative scoring models. Stay connected to these updates through NAGGL or direct SBA communications.
How CRS Supports Lenders Through This Transition
At Credit Reporting Services, we’ve been helping lenders navigate credit data complexity for over 25 years. Here’s how we can support your team as the SBSS landscape evolves.
SBSS Access Through Our API
CRS is among the select providers with direct API integration for FICO SBSS scores. If you choose to continue using SBSS—whether for 7(a) Small Loans, SBA Express, or non-SBA commercial lending—you can access it seamlessly through our platform alongside your other credit data needs.
Comprehensive Alternative Data
For lenders exploring credit packages beyond SBSS, our unified credit API aggregates data from Equifax, Experian, TransUnion, Dun & Bradstreet, and other leading providers. This enables you to pull consumer credit reports, business credit reports, income verification, identity verification, and public records through a single integration.
Consultative Partnership
We don’t simply provide data—we help you build the right credit decisioning framework. Our team includes credit industry veterans who understand both the technical and compliance dimensions of SBA lending. Whether you’re evaluating how to adapt your small loan underwriting or exploring new data products, we’re here to guide you.
Looking Ahead
The SBSS sunset reflects a broader trend toward lender flexibility in SBA programs. While this change removes a specific requirement, it doesn’t diminish the importance of sound underwriting. Credit quality remains the foundation of responsible lending.
For most lenders, the practical impact may be minimal in the near term—especially those who plan to continue using SBSS as part of their established workflows. For others, this is an opportunity to reassess how they structure credit decisioning for small business loans.
Whatever path you choose, CRS is ready to support your lending operations with fast, compliant access to the credit data you need.
