The One Big Beautiful Bill: Tax & Economic Reforms
1. Makes the 2017 Tax Cuts Permanent
Key Element: Preserves Section 199A — the 20% Qualified Business Income (QBI) deduction
Why It Matters for SBA Loans:
- Most SBA borrowers operate as pass-through entities (LLCs, S-Corps).
- The 199A deduction reduces taxable income, leaving more cash for debt service.
- Lenders assess cash flow to determine loan eligibility. With better after-tax income, borrowers look stronger on paper.
🟢 Bottom Line: More eligible borrowers + improved debt coverage ratios = easier SBA approvals.
2. Prevents Doubling Tax Rates on Small Businesses
Key Element: Stops top marginal rates from jumping to ~43% for some business owners
Why It Matters for SBA Loans:
- High tax rates reduce profit margins and erode working capital.
- Lower tax burdens mean business owners retain more earnings — critical for meeting SBA loan repayment obligations.
- SBA lenders analyze historical and projected net income. Tax savings translate to more favorable loan metrics.
🟢 Bottom Line: Protects profitability and reduces perceived risk from a lender’s perspective.
3. 100% Expensing for Capital Investments
Key Element: Immediate tax deductions for investments in:
- Real estate
- Equipment
- Factory upgrades
- R&D
Why It Matters for SBA Loans:
- SBA 504 loans are commonly used for real estate and equipment.
- With 100% expensing, borrowers can write off full costs in year one, creating large tax shields.
- That improves year-one cash flow — often the most sensitive period in a loan repayment schedule.
🟢 Bottom Line: Stronger early cash flow = easier SBA loan underwriting and less borrower strain.
4. Stimulates Economic Growth: $750B & 1M Jobs
Key Element: Pro-growth macro policy generates new business formation and M&A
Why It Matters for SBA Loans:
- SBA 7(a) loans are frequently used to buy existing businesses.
- New startups and business acquisitions flourish in a low-tax, high-growth environment.
- Increased M&A = more buyers needing SBA financing
- More new businesses = greater demand for SBA microloans, 7(a), and CAPLines
🟢 Bottom Line: High growth fuels the SBA loan pipeline on both sides — more deals and more borrowers.
5. Relief for Gig & Tipped Workers
Key Element:
- Removes the $600 IRS reporting rule on third-party platforms like Venmo, PayPal.
- Cuts taxes on tips and overtime earnings.
Why It Matters for SBA Loans:
- Gig workers and side-hustlers often use SBA Microloans to transition into formal businesses.
- More disposable income = greater savings, capital, and ability to qualify for loans.
- Simplifying tax burdens encourages entrepreneurship, especially among underbanked populations.
🟢 Bottom Line: Expands the pool of qualified SBA borrowers, especially at the microloan and startup levels.
6. Simplifies Administrative & Regulatory Burden
Key Element: General commitment to reduce IRS red tape and compliance pressure
Why It Matters for SBA Loans:
- SBA lending is notoriously paperwork-intensive.
- If this bill streamlines federal compliance, SBA lenders could process loans faster.
- Borrowers may face fewer hurdles when applying or proving tax positions tied to business income and deductions.
🟢 Bottom Line: Smoother SBA processes for both lenders and borrowers = increased access and efficiency.
SOP 50 10 8 Effective Date: June 1, 2025 Highlights:
Reinstates stricter underwriting standards
Mandates a minimum 10% equity injection for startups and complete ownership changes.
Mandates a minimum 10% equity injection for startups and complete ownership changes.
Mandates a minimum 10% equity injection for startups and complete ownership changes.
Mandates a minimum 10% equity injection for startups and complete ownership changes.
Mandates a minimum 10% equity injection for startups and complete ownership changes.
Reintroduces the SBA Franchise Directory.
Mandates a minimum 10% equity injection for startups and complete ownership changes.
Prohibits refinancing of Merchant Cash Advances (MCAs) and factoring arrangements.