Must a selling owner under 20% guarantee the SBA loan?
Short answer
Yes, in a partial buyout. A selling owner who takes proceeds and keeps less than 20% must give a full guaranty for at least two years after final disbursement. Release requires 12 consecutive current months. Source: SOP 50 10 8.1, App. 15, Para. A.1.c.ii.
Yes. SOP 50 10 8.1, Appendix 15, requires it when an owner sells part of a stake for loan proceeds and keeps under 20%. The interest can be direct or indirect. Para. A.1.c.ii ties this to 13 CFR § 120.160(a).
How the guaranty works
- It covers the full loan amount.
- It must run at least two years after final loan disbursement.
- The guarantor may be released only if the loan has been current for the consecutive 12 months before release.
- The lender may use SBA Form 148L or its equivalent.
What the guarantor does not have to pledge
SBA does not require this two-year guarantor to pledge personal assets, such as a residence, if there is a collateralProperty a lender can take and sell if a loan is not repaid. shortfall.
Owners at or above the line
Normal rules apply to anyone holding 20% or more after the sale. That person gives an unlimited full guaranty, based on post-sale percentages (Para. A.2).
ESOP sellers are different
If the seller of an employer business remains a partial owner in an employee stock ownership plan (ESOP) deal, a full, unlimited guarantee is required at any percentage. That requirement is statutory and cannot be waived (15 U.S.C. § 636(a)(15)(B)(iv)(II)).
Lenders may require guaranties beyond SBA's minimums (Section A, Ch. 5, Para. A).
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