Best Practices: SOP 50 57 4 Is Now In Effect

There is quite a bit of information for SBA lenders to keep track of at the moment.  As a reminder, the new SOP 50 57 4 (the “SOP”), which governs 7(a) Servicing and Liquidation, officially went into effect on November 1, 2025.

Lenders should review the updated SOP to ensure they are familiar with the changes introduced in this version. A few key updates include revisions to the definitions section in Chapter 2. For example, the definition of “Appraisal” now specifies that a lender may not use an appraisal ordered or prepared on behalf of a borrower or guarantor. (See SOP 50 57 4, Chapter 2(A)(4).)

References to the Little Rock Commercial Loan Servicing Center have been removed, reflecting the closure of that office. The SOP also clarifies PPP loan record retention requirements and provides additional guidance regarding payment of lenders’ annual servicing fees.

Of particular note, Chapter 19 now raises the threshold for required liquidation of personal property collateral. Previously, lenders were required to liquidate collateral valued at $5,000 or more; the new threshold is $10,000. This change may help lenders avoid the time and cost of liquidating low-value collateral, improving efficiency in the liquidation process.

The SOP also incorporates a new loan status, “SBA Uncollectible,” implemented by the SBA in July 2025. This status, discussed throughout the SOP, applies when any obligor or guarantor associated with a loan can be referred to Treasury. The SOP provides guidance on how payments are to be applied once a loan has been placed in this status.

The release of a new SOP is always an excellent opportunity for lenders to not only review the updated requirements for compliance but also to ensure that their internal policies and procedures align with the new guidance.

If you need assistance interpreting provisions of SOP 50 57 4 or updating your internal bank policies to comply with the new requirements, please contact: Lyndsay Rowland at lrowland@starfieldsmith.com or 267-470-1154.