# 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.

Canonical page: https://www.sbaexpress.loans/answers/selling-owner-under-20-percent-guaranty/
Last checked: 2026-11-08

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 collateral 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).

## Sources

- [SOP 50 10 8.1, App. 15, Para. A.1.c.ii (about p. 367)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, App. 15, Para. A.2 (about p. 368)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. A, Ch. 5, Para. A (p. 93)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR § 120.160(a)](https://www.ecfr.gov/current/title-13/section-120.160)
- [SBA Form 148L, Unconditional Limited Guarantee](https://legacy.sba.gov/document/sba-form-148-l-limited-guarantee)