How does SBA decide if my business is in a rural area for the fee waiver?
Short answer
SBA looks at the county. SOP 50 10 8.1, Appendix 3 counts an area as rural if its county is at least 30 percent rural, per the Census Bureau. In FY2027 that can zero out the upfront fee on loans of $700,000 or less.
SOP 50 10 8.1, Appendix 3 (about p. 305) defines Rural Area for 7(a) and 504 loans. It is an area located in a county that the U.S. Census Bureau has defined as at least 30 percent rural. The SOP points to the Census Bureau's urban and rural classification and its county-level information.
Why the county matters
The test looks at the county, not your street. A business in a town can qualify if its county meets the 30 percent line.
What the label gets you in FY2027
- 7(a): the Upfront Fee is 0% on loans of $700,000 or less to rural businesses (SBA Information Notice 5000-881797, p. 1). Larger loans pay the regular schedule.
- 504: both fees are waived for manufacturers, listed food supply chain businesses and businesses in rural areas (SBA Information Notice 5000-881796, p. 1).
What SBA does not spell out
The notices and the SOP do not say which location counts for a business with more than one site. They also do not name the Census release a lender must use. Ask your lender how it applies the test and what it keeps in the file.
The waiver covers the Upfront Fee only on 7(a) loans. It runs for FY2027 and SBA can change it the next fiscal year.
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