SBA & SPARK Update Regarding Procedural Notice 5000-872050 Citizenship and Residency Requirements

The SBA has issued Procedural Notice 5000-872050, updating SOP 50 10 8 – Citizenship and Residency Requirements. These changes impact citizenship and ownership eligibility for 7(a) and 504 loans.

To align with this guidance, SPARK will deploy a hotfix on Wednesday, December 31st, at 11:00 PM CT.

What's Changed

SBA Eligibility Citizenship Section

SPARK’s Citizenship section has been updated to reflect the SBA’s revised eligibility framework, including the allowance for limited foreign or non-resident ownership and updated ineligible person definitions.

The section now evaluates eligibility using a tiered question flow that mirrors SBA certification requirements.

Question 1 - Are 100% of direct and/or indirect owners U.S. Citizens, U.S. Nationals, or Lawful Permanent Residents?

This question is automatically answered only when 100% ownership has been documented for:

• All applicant businesses, and

• All Operating Company guarantors (for EPC / OC transactions)

If the answer is Yes, no further citizenship questions are required and the section passes.

If Question 1 is answered No, SPARK prompts for additional validation:

Question 2 - Are any individuals an “Ineligible Person” that does not have Conditional LPR status?

Question 3 - Is the aggregate foreign ownership greater than 5%?

Both questions must be answered No for the Citizenship section to pass.

This approach ensures that applications relying on permitted exceptions are evaluated consistently while maintaining compliance with SBA eligibility requirements.

The SBA Eligibility Citizenship changes will only apply to new loans and loans that do not have an SBA Authorization Date or SBA Loan Number.

SBA Knowledge Assistant

The SBA Knowledge Assistant has been updated to incorporate Procedural Notice 5000-872050, ensuring that responses related to citizenship and residency eligibility reflect the most current SBA guidance.

If you have any questions, please reach out to your Customer Success Manager or email us at support@lendwithspark.com.