{"ok":true,"canonical_url":"https://dealroom.so/sba-loans/basics/what-is-the-required-personal-ownership-percentage-to-be-considered-a-principal-by-the-sba","api_url":"https://dealroom.so/api/public/questions/what-is-the-required-personal-ownership-percentage-to-be-considered-a-principal-by-the-sba","question":"What is the required personal ownership percentage to be considered a 'principal' by the SBA?","topic":"Eligibility & ownership","audience":"new","bot_mode":"buyer","short_answer":"For SBA 7(a) loan purposes, anyone who owns 20% or more of the equity in the applicant business is generally considered a 'principal' and is subject to specific requirements.","rule":"The SBA defines principals as individuals or entities owning 20% or more of the equity in the applicant business. These principals are typically required to provide a personal guarantee, submit personal financial statements, and undergo character and background checks.","example":"A business has four owners with 25% each. All four would be considered principals by the SBA and would need to personally guarantee the loan and complete all necessary personal disclosures.","what_lenders_check":"Lenders must accurately identify all principals to ensure compliance with SBA requirements for personal guarantees and background checks. Misidentifying or omitting a principal can jeopardize the SBA guarantee.","required_facts":["20% equity ownership","Personal guarantee","Personal financials required","Background checks","Character review"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","SBA Form 1919 - Borrower Information Form"],"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":"SBA Form 1919 - Borrower Information Form","url":"https://www.sba.gov/sites/default/files/2025-03/2025.02.27%20Form%201919%20-%20Updates%20%28FINAL%29_03-12-2025%20%281%29.pdf"}],"related_questions":[{"question":"Will a felony conviction prevent me from getting an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/will-a-felony-conviction-prevent-me-from-getting-an-sba-7-a-loan"},{"question":"Do I need a green card to qualify for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/do-i-need-a-green-card-to-qualify-for-an-sba-7-a-loan"},{"question":"Are there any specific training or experience requirements for the business owner?","url":"https://dealroom.so/sba-loans/basics/are-there-any-specific-training-or-experience-requirements-for-the-business-owner"},{"question":"What are the requirements for citizenship or residency for SBA 7(a) loan applicants?","url":"https://dealroom.so/sba-loans/basics/what-are-the-requirements-for-citizenship-or-residency-for-sba-7-a-loan-applicants"},{"question":"Do I need to be a U.S. citizen to qualify for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/do-i-need-to-be-a-u-s-citizen-to-qualify-for-an-sba-7-a-loan"},{"question":"How does the SBA verify the legal status (citizenship/residency) of all owners for a 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/how-does-the-sba-verify-the-legal-status-citizenship-residency-of-all-owners-for-a-7-a-loa"}],"related_terms":[{"term":"Aggregate SBA 7(a) Loan Eligibility","url":"https://dealroom.so/glossary/aggregate-sba-7-a-loan-eligibility"},{"term":"Repair to the guaranty","url":"https://dealroom.so/glossary/repair-to-the-guaranty"},{"term":"Required guarantor","url":"https://dealroom.so/glossary/required-guarantor"},{"term":"Guaranty Percentage","url":"https://dealroom.so/glossary/guaranty-percentage"},{"term":"SBA 7(a) program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"}],"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-loans/basics/what-is-the-required-personal-ownership-percentage-to-be-considered-a-principal-by-the-sba","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."]}