Does your SBA personal guarantee end when you sell the business?
Short answer
Not automatically. SBA Form 148 says the guarantee remains in effect until the note is paid in full. A payoff at closing ends it. If the loan stays in place, you need a written release from the lender. Source: SBA Form 148, paras. 1, 4 and 9.H.
Not automatically. SBA Form 148 says the guarantee remains in effect until the note is paid in full (para. 1). Selling your interest in the business does not change that.
When it ends
- The loan is paid off at closing.
- The lender releases you in writing.
Form 148 lets the lender release a guarantor (para. 4.C). Oral statements cannot contradict the written terms (para. 9.H). Lenders may use their own forms, so check yours (SOP 50 10 8.1, Sec. B, Ch. 6, Para. D.4).
Who must approve a release
On a 504 loan, a non-PCLP Certified Development Company (CDC) needs SBA's prior written consent to release a guarantor (13 CFR 120.536(b)(4)). For a 7(a) loan, SOP 50 57 and SBA's Lender Matrix set the rule. They are not among the sources behind this page.
Special rule for a partial sale
A selling owner left with under 20% after a partial buyout must give a full guaranty for at least two years after final disbursement. That guarantor may be released only if the loan has been current for the prior 12 consecutive months (Appendix 15, Para. A.1.c.ii).
If a buyer assumes the loan
An assumption does not end your guarantee by itself. Form 148 defines the note to include any assumption (para. 2). Ask for a written release in the assumption documents.
Changes after you leave
If the lender increases the debt without your consent, you are not liable for the increase. You remain liable for everything else (para. 6.C.14).
Ask lending partners about your loan
Tell us the amount you need and what it is for. We refer you to lenders that may fund businesses like yours, and it costs you nothing.
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