The Small Business Administration is applying new rules to its core $30 billion a year loan program without public guidance. The shift could make it harder for buyers to raise the capital to acquire a business. The Small Business Administration is changing the rules mid-game, without notice, and applying those changes to deals that are already on the books. The underhandedness is about who counts in the 7(a) program, which backstops about 70,000 loans a year with about $100 billion worth currently outstanding. In the past, only the borrower who signed the personal guarantee was barred from future SBA and other government-backed loans if a deal went bad. Now lenders say that rule is being applied to everyone involved in owning the business, including passive investors with minority interests. That means if you put any money into an SBA-backed deal and it fails, you may be shut out of future government-backed loans just as if you were the one signing on the dotted line. That risk was not part of the original agreement. No one is entirely sure if this is a policy change or something else. Investors and lenders say deals are being flagged in the SBA’s system, but the agency has not issued guidance explaining why. That has left people guessing. Some think it could be a glitch. Others believe it is intentional, part of an effort to stop funds–as in private equity funds– and other outside investors from using government-backed loans with longer repayment periods and smaller down payments to boost their returns. The SBA didn’t respond to requests for comment. The 7(a) program is the main way people finance small business acquisitions. A bank makes the loan, and the buyer usually puts down about 10%. The SBA then guarantees a large share of that loan, often around 75%, which means if the borrower cannot repay, the government covers that portion for the bank. That guarantee is what makes these loans possible. The repayment terms are long enough for buyers to use the cash flow from the business to pay down the debt over time. In some cases this amounts to as much as 10 years. Though the average SBA 7(a) loan is only about $500,000, the SBA program is large. In fiscal 2025 ending last October, the SBA backed $37.2 billion in 7(a) loans. In fiscal 2026, it has already backed $13.5 billion so far. The SBA doesn’t track how many deals rely on outside investors, but a 2023 studyof small business buyers suggests it is most. Roughly six in ten raise equity from others, often friends and family writing relatively small checks. Grant Hensel found out about the change the hard way. Hensel, 32, is the founder and general partner of Entrepreneurial Capital, a Chicago-based fund that has raised just over $12 million to support people buying small businesses. The fund has made four investments so far, three of them using SBA loans. He has also made at least eight personal investments tied to SBA deals. The issue surfaced in February 2026 when one of Hensel’s deals with a bank it often uses ran into problems. When the loan went through the SBA’s approval system, it flagged a minority investor tied to a past loan that had gone delinquent or defaulted even though that same investor had participated in previous loans from the same bank. This time, the deal stalled in the system. Hensel was told that a recent update removed the distinction between the main borrower and passive owners. Everyone was grouped together. Rules that used to apply only to the borrower were now being applied to all owners. That created a new kind of failure point. If any investor had been tied to a past SBA loan that went delinquent or defaulted, the entire deal could be blocked. Hensel says whatever is going on “it’s not written in the rules, and there’s been no announcement.” The retroactive element makes it worse. Investors who put money into deals years ago may now be judged under a standard that did not exist at the time. The confusion runs deeper than one deal. Adam Markley, 41, has spent nearly a decade buying and investing in small businesses. He is the founder and CEO of Prox Capital Group, which raised $10 million (it’s deployed $1.3 million of that in SBA deals, so far) to invest alongside operators and helps run back-office functions across a portfolio of companies. He has personally acquired multiple businesses, including four using SBA loans, and now invests as a minority partner in others. Read the full story on Forbes: By Brandon Kochkodin https://www.forbes.com/sites/brandonkochkodin/2026/03/30/how-trumps-sba-quietly-pulled-the-rug-on-small-business-investors/ Learn more about your ad choices. Visit megaphone.fm/adchoices