SBA lending to specialty trade contractors sinks this year

Small Business Administration (SBA) loan approvals are down across specialty trade contractors amid a rules overhaul at the government agency. 

What’s happening: Approvals of the SBA’s flagship 7(a) loans for specialty trade contractors fell 22 percent year over year in the first half of 2026, from around 3,200 to roughly 2,500, according to agency data reviewed by Homepros. 

• 159 loans were approved for roofing contractors, in particular, from January through June, down 24 percent from the same period in 2025. For HVAC and plumbing contractors, that figure was 535 loans, a 15 percent year-over-year decrease. 
• The data was first highlighted in a Washington Business Journal report on Wednesday.

At the same time, new rules taking effect later this year may impact how small businesses receive funds going forward, the outlet noted. 

Catch up quick: The Trump administration has cracked down on the SBA, cutting 2,700 employees in early 2025 and ending hardship accommodations for businesses that couldn’t repay their loans, according to The New York Times.

• The administration has also reversed several Biden-era policies that approved borrowers who may have been denied by other lenders, according to an SBA press release, which may have contributed to the decline.  

Zoom in: Starting October 1, the minimum debt service coverage ratio (DSCR) — a measure of a business’s cash flow relative to its debt service obligations — required for borrowers using 7(a) loans for initial acquisitions or owner buyouts will rise from 1.15x to 1.25x. (For owners who have operated a business for at least two full fiscal years and are buying a business in the same industry, the minimum will remain at 1.15x.)

• This is just one of several changes that will take effect in October. 

Of note: An agency rule that took effect in March requires businesses seeking 7(a) loans to be 100 percent owned by U.S. citizens or nationals whose primary residence is in the U.S., cutting off eligibility for businesses owned even partly by lawful permanent residents, or green-card holders.

• The SBA has also proposed a rule that would designate 114,000 larger businesses, including those that generate over $1 billion in annual revenue, as small businesses. A public comment period for the proposal ends November 20.

Yes, but: Earlier this year, the SBA allowed borrowers to combine 7(a) and 504 loans for a total of $10 million.