SBA Form 148: Unconditional Guarantee

Who completes it

Every individual or entity owning 20% or more must give a full guaranty (SOP 50 10 8.1, Sec. A, Ch. 5, Para. A). If no one reaches that level, at least one owner must provide a full unconditional guaranty. An owner who signs the note as a borrower does not also sign a guaranty (Para. A.1.a). An ESOP or 401(k) plan does not guarantee the loan, but a 401(k) sponsor must (Sec. A, Ch. 2, Paras. B.6 and D). On 7(a) loans, the lender may use its own form.

When it is used

At closing, with the note and other loan documents (Sec. B, Ch. 6, Para. D.4).

What it asks

• It is an agreement, not a questionnaire. A loan grid records the SBA loan number and name, guarantor, borrower, lender, date and note amount.
• Your promise to pay all amounts owing under the note until it is paid in full (para. 1).
• The lender's powers to modify terms, release collateral or settle with others without notice to you (para. 4).
• Your waivers of rights, notices and defenses, including the right to require a valuation of collateral (para. 6).
• Any state-specific provisions, or the word NONE (para. 10).
• The legal name and signature of each guarantor. All who sign one form are jointly and severally liable (para. 9.D).

A filled-in example

This example is made up. Sample Bakery LLC, the people, the lender and every figure are fictional, and the ID numbers are zeros. It shows what finished entries look like, using the form's own field names.

An example only. Use your own facts on the real form, and check that your copy is the edition named above.

Common mistakes

• Expecting the lender to collect from the business first. Paragraph 1 says the lender need not seek payment from any other source before demanding it from you.
• Assuming SBA covers you if it pays the lender. Your liability continues, and SBA is not a co-guarantor (para. 9.B).
• Assuming a sale ends your liability. The guarantee remains in effect until the note is paid in full (para. 1).
• Dropping below 20% right before applying. Anyone subject to the guaranty rule 6 months before the application stays subject to it (SOP 50 10 8.1, Sec. A, Ch. 5, Para. A.4). The main exception is an owner who fully divests before applying and cuts all ties for the life of the loan (Para. A.4.b.i).
• Forgetting combined ownership. A spouse owning less than 20% must still guarantee in full when both spouses and minor children together hold 20% or more (Para. A.2).
• Holding 20% or more through a trust. The trust gives a guaranty, and the trustor must also guarantee personally (Para. A.3).
• Naming a trade name as guarantor. SBA's instructions say not to include DBAs. Names in the grid must match the signature block (Instructions, Para. E.3).
• Expecting to edit the SBA form. Its text may not be altered, except to complete it (Instructions, Para. B). On 504 loans the SBA form is required (Para. A).