{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-is-the-maximum-ownership-percentage-for-an-individual-to-avoid-personal-guaranty","api_url":"https://dealroom.so/api/public/questions/what-is-the-maximum-ownership-percentage-for-an-individual-to-avoid-personal-guaranty","question":"What is the maximum ownership percentage for an individual to avoid personal guaranty?","topic":"Personal guarantees","audience":"lender","bot_mode":"lender","short_answer":"An individual owning less than 20% equity in the borrower business is generally not required to personally guarantee an SBA 7(a) loan.","rule":"The SBA requires personal guarantees from all owners holding 20% or more equity. This threshold is set to ensure that primary stakeholders have personal liability for the business's debt. Owners below this threshold are typically not required to guarantee unless specifically requested by the lender for prudent lending reasons.","example":"A business has five owners with 19%, 19%, 20%, 20%, and 22% ownership. The three owners with 20% or more must guarantee, while the two 19% owners are not automatically required to, though the lender may request it based on credit.","what_lenders_check":"Lenders must verify all ownership percentages accurately and decide whether to require guarantees from owners with less than 20% based on their credit policies and prudent lending standards, especially for weaker credit profiles.","required_facts":["Ownership percentage","Equity stake","Personal guaranty rule","Lender discretion"],"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":[],"related_terms":[{"term":"Guaranty Percentage","url":"https://dealroom.so/glossary/guaranty-percentage"},{"term":"Repair to the guaranty","url":"https://dealroom.so/glossary/repair-to-the-guaranty"},{"term":"Personal Guaranty","url":"https://dealroom.so/glossary/personal-guaranty"},{"term":"Application for Guaranty","url":"https://dealroom.so/glossary/application-for-guaranty"},{"term":"Principal (Individual)","url":"https://dealroom.so/glossary/principal-individual"},{"term":"Register the Guaranty","url":"https://dealroom.so/glossary/register-the-guaranty"}],"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-is-the-maximum-ownership-percentage-for-an-individual-to-avoid-personal-guaranty","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."]}