{"ok":true,"canonical_url":"https://dealroom.so/glossary/principal-owner","api_url":"https://dealroom.so/api/public/glossary/principal-owner","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"principal-owner","term":"Principal Owner","group":"People and paperwork","definition":"This is any individual who owns 20% or more of the equity in a business. All principal owners of a borrower business must personally guarantee an SBA 7(a) loan.","what_it_means":"If you're buying a business with partners, anyone owning 20% or more is a principal owner and must sign a personal guarantee. This is a non-negotiable SBA requirement. Ensure all partners understand this obligation before moving forward with a 7(a) loan.","url":"https://dealroom.so/glossary/principal-owner","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"personal-guarantee","term":"Personal guarantee","url":"https://dealroom.so/glossary/personal-guarantee"},{"slug":"guaranty","term":"Guaranty","url":"https://dealroom.so/glossary/guaranty"},{"slug":"key-principal","term":"Key principal","url":"https://dealroom.so/glossary/key-principal"},{"slug":"co-borrower","term":"Co-borrower","url":"https://dealroom.so/glossary/co-borrower"}],"related_questions":[{"question":"What happens to an SBA loan if a principal owner or guarantor dies unexpectedly?","url":"https://dealroom.so/sba-7a/questions/what-happens-to-an-sba-loan-if-a-principal-owner-or-guarantor-dies-unexpectedly"},{"question":"What is the required personal ownership percentage to be considered a 'principal' by the SBA?","url":"https://dealroom.so/sba-loans/basics/what-is-the-required-personal-ownership-percentage-to-be-considered-a-principal-by-the-sba"},{"question":"What is the minimum ownership percentage requiring a personal guarantee from a 7(a) loan principal?","url":"https://dealroom.so/sba-7a/questions/what-is-the-minimum-ownership-percentage-requiring-a-personal-guarantee-from-a-7-a-loan-pr"},{"question":"What if an owner has a spouse with significant assets but no ownership in the business?","url":"https://dealroom.so/sba-7a/questions/what-if-an-owner-has-a-spouse-with-significant-assets-but-no-ownership-in-the-business"},{"question":"When are non-owner spouses of 20%+ owners required to provide a personal guaranty for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/when-are-non-owner-spouses-of-20-owners-required-to-provide-a-personal-guaranty-for-a-7-a-"},{"question":"How does the SBA view a change of ownership where the new owner has no prior industry experience?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-view-a-change-of-ownership-where-the-new-owner-has-no-prior-industry-expe"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Principal Owner","url":"https://dealroom.so/glossary/principal-owner","source_type":"DealRoom Data"}}