SBA Hot Topic Tuesday: SBA and the $10 Million Loan Increase for Manufacturers

December 9, 2025

by Bob Coleman
Founder & Publisher

SBA Hot Topic Tuesday: SBA and the $10 Million Loan Increase for Manufacturers

The following remarks have been edited and formatted by Bob Coleman from Dianna Seaborn’s presentation at the 18th Annual Secondary Market Summit on December 4, 2025 in Washington D.C.

The question I am hearing most often is this: With Congress considering an increase in the maximum 7(a) loan amount for manufacturing borrowers from $5 million to $10 million, what happens to the guaranteed portion, and what does that mean for the secondary market? Lenders want to know whether the guaranty would rise to $7.5 million, and if so, how those larger guaranties would move into pools. They also want to know whether SBA is considering ways to split guaranties so investors are not forced to take on a single very large position.

Let me speak directly to that.

Under the statute and the regulations, the guaranty percentage does not change. It remains 75%. So yes, if the loan amount increases to $10 million, the guaranteed portion rises to $7.5 million. That is the part that gets stripped and sold into the secondary market. And that is exactly why we are taking a careful look at how this will work in practice.

We know that a guaranteed piece of that size is different from what the market is used to. We also know from your feedback that allowing some form of splitting or multi note structure could make these larger loans much more workable for both lenders and investors. Some of you have asked whether splitting should happen at the lender level or whether the Fiscal Transfer Agent should handle the break out.

Others have raised the possibility of using participation structures so that smaller institutions can still originate larger loans without holding the full balance. These are all valid questions and they are exactly why we want to talk with you before we draft the rule.

The good news is that our current systems can support multi note arrangements. There is precedent in other federal lending programs and the technology infrastructure can accommodate it. But we need to determine the best approach. Should it be driven by lenders? Should SBA or the FTA handle it? How do we minimize the operational burden on lenders who already carry a lot of responsibility in servicing. How do we ensure the pools remain attractive to investors who need diversification and predictability.

Those are the conversations we want to have with you now.

I want to be clear about the process. Rulemaking is not the starting point. It is the end point. By the time a proposed rule appears in the Federal Register, we are already locked into the structure we have drafted.

You absolutely should comment once a proposal is published. We read every comment and must respond to them.

But I would much rather hear from you before we write the rule!

I need to know whether the approach we are considering makes sense in the real world. I need to understand where the pressure points are and what the unintended consequences might be. I do not want to be surprised after publication and neither do you.

That is why I am encouraging you to speak up now.

Tell us what works in the secondary market and what does not. Tell us what level of complexity you can manage. Tell us how investors think about concentration risk and pool diversification. Tell us what costs fall on lenders and what you believe should be handled elsewhere in the system. The more detail you share, the better job we can do in designing a rule that works for everyone.

The House has passed the manufacturing increase and we expect the Senate to move on it. We need to be ready with a structure that supports these loans without creating disruption.

Larger manufacturing loans absolutely support economic growth in communities that need it. But we must implement this in a way that protects the strength of the secondary market and keeps the program accessible for lenders of all sizes.

So my message is simple. We are listening. We want to build this in collaboration with you. We want a structure that supports lenders, attracts investors, and keeps credit flowing to manufacturing businesses.

And we need your feedback now, not after the rule is written.