{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/if-i-m-buying-out-a-partner-does-the-remaining-partner-also-need-to-personally-guarantee-t","api_url":"https://dealroom.so/api/public/questions/if-i-m-buying-out-a-partner-does-the-remaining-partner-also-need-to-personally-guarantee-t","question":"If I'm buying out a partner, does the remaining partner also need to personally guarantee the SBA loan for $500,000?","topic":"Partner buyouts","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, generally all owners of 20% or more of the business, including the remaining partner, must provide a full personal guarantee for an SBA 7(a) loan.","rule":"SBA policy requires that all owners of 20% or more equity in the business provide an unconditional personal guarantee. In a partner buyout, if the remaining partner holds 20% or more of the post-acquisition ownership, they must personally guarantee the loan, regardless of whether they are directly benefiting from the loan proceeds for the buyout.","example":"You and your partner each own 50% of a business. You use an SBA loan to buy out your partner's 50% stake, making you a 100% owner. You would provide a personal guarantee, and if your partner had remained with 20% or more, they would also need to guarantee.","what_lenders_check":"Lenders confirm all principals with 20% or more ownership sign personal guarantees to secure the loan. They also assess the remaining partner's creditworthiness and financial stability.","required_facts":["Personal guarantee","20% ownership","Remaining partner","Unconditional"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"}],"related_questions":[{"question":"If I am buying out a partner, does the SBA require the business to pass a cash flow test post-acquisition?","url":"https://dealroom.so/sba-7a/questions/if-i-am-buying-out-a-partner-does-the-sba-require-the-business-to-pass-a-cash-flow-test-po"},{"question":"If I am buying out a partner, how does the SBA ensure the purchase price is fair and justifiable?","url":"https://dealroom.so/sba-7a/questions/if-i-am-buying-out-a-partner-how-does-the-sba-ensure-the-purchase-price-is-fair-and-justif"},{"question":"Can an SBA 7(a) loan be used to purchase a business if the seller will retain a minority ownership stake?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-purchase-a-business-if-the-seller-will-retain-a-minority-ow"},{"question":"What are the requirements for the seller in an SBA 7(a) business acquisition loan?","url":"https://dealroom.so/sba-7a/questions/what-are-the-requirements-for-the-seller-in-an-sba-7-a-business-acquisition-loan"},{"question":"Can an SBA 7(a) loan be used to fund a partner buyout with an earn-out provision?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-fund-a-partner-buyout-with-an-earn-out-provision"},{"question":"What is the importance of a non-compete agreement from the seller in an SBA 7(a) acquisition?","url":"https://dealroom.so/sba-7a/questions/what-is-the-importance-of-a-non-compete-agreement-from-the-seller-in-an-sba-7-a-acquisitio"}],"related_terms":[{"term":"M&A advisor","url":"https://dealroom.so/glossary/ma-advisor"},{"term":"Buyout of a Partner","url":"https://dealroom.so/glossary/buyout-of-a-partner"},{"term":"Personally Liable","url":"https://dealroom.so/glossary/personally-liable"},{"term":"Repair of the guarantee","url":"https://dealroom.so/glossary/repair-of-the-guarantee"},{"term":"Repair to the guaranty","url":"https://dealroom.so/glossary/repair-to-the-guaranty"},{"term":"Partner","url":"https://dealroom.so/glossary/partner"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/if-i-m-buying-out-a-partner-does-the-remaining-partner-also-need-to-personally-guarantee-t","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}