{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-if-an-owner-with-exactly-20-equity-refuses-to-provide-a-personal-guaranty-will-the-sb","api_url":"https://dealroom.so/api/public/questions/what-if-an-owner-with-exactly-20-equity-refuses-to-provide-a-personal-guaranty-will-the-sb","question":"What if an owner with exactly 20% equity refuses to provide a personal guaranty, will the SBA 7(a) loan be declined?","topic":"Eligibility determinations","audience":"lender","bot_mode":"lender","short_answer":"Yes, if an owner with exactly 20% or more equity refuses to provide a personal guaranty, the SBA 7(a) loan will be declined, as this is a mandatory requirement for all such owners.","rule":"SBA policy mandates that all owners of 20% or more of the equity in the applicant business must provide an unconditional personal guaranty. This ensures that principals have a vested interest in the business's success and are personally accountable for the loan, aligning with prudent lending standards and mitigating risk to the SBA.","example":"A partnership with five equal 20% owners applies for a 7(a) loan. If one partner explicitly states they will not personally guarantee the loan, the lender must decline the application, as all five partners are required to provide a guaranty.","what_lenders_check":"Lenders must clearly communicate this mandatory guaranty requirement early in the application process. Failure to secure a guaranty from all 20%+ owners will result in a guaranty denial from the SBA, making the loan unbankable under the 7(a) program.","required_facts":["20% ownership","Personal guaranty","Mandatory requirement","Loan decline","Risk mitigation"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","7(a) Loan Program Terms, Conditions, and Eligibility"],"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"},{"title":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"}],"related_questions":[{"question":"Can a trust or an estate be an eligible borrower for an SBA 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-trust-or-an-estate-be-an-eligible-borrower-for-an-sba-7-a-loan"},{"question":"What constitutes \"passive income\" disqualifying a business from 7(a) loan eligibility?","url":"https://dealroom.so/for-lenders/questions/what-constitutes-passive-income-disqualifying-a-business-from-7-a-loan-eligibility"},{"question":"Are businesses that primarily derive revenue from real estate rentals eligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/are-businesses-that-primarily-derive-revenue-from-real-estate-rentals-eligible-for-a-7-a-l"},{"question":"Can a business primarily engaged in lending or investment be eligible for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-business-primarily-engaged-in-lending-or-investment-be-eligible-for-a-7-a-loan"},{"question":"What impact does a principal's recent federal tax lien have on 7(a) loan eligibility, even if paid?","url":"https://dealroom.so/for-lenders/questions/what-impact-does-a-principal-s-recent-federal-tax-lien-have-on-7-a-loan-eligibility-even-i"},{"question":"How does the SBA define 'passive business' making it ineligible for a 7(a) loan, and what specific activities might trigger this?","url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-define-passive-business-making-it-ineligible-for-a-7-a-loan-and-what-spec"}],"related_terms":[{"term":"Lease with an option to purchase","url":"https://dealroom.so/glossary/lease-with-an-option-to-purchase"},{"term":"Repair to the guaranty","url":"https://dealroom.so/glossary/repair-to-the-guaranty"},{"term":"Owner Equity","url":"https://dealroom.so/glossary/owner-equity"},{"term":"Equity Owner","url":"https://dealroom.so/glossary/equity-owner"},{"term":"Personal Guaranty","url":"https://dealroom.so/glossary/personal-guaranty"},{"term":"Will/trust","url":"https://dealroom.so/glossary/will-trust"}],"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":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/for-lenders/questions/what-if-an-owner-with-exactly-20-equity-refuses-to-provide-a-personal-guaranty-will-the-sb","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."]}