For SBA lenders
Short answer
The SBA defines an "associate" broadly to include individuals and entities closely tied to the applicant, requiring them to provide a personal guaranty if they own 20% or more of the business, or have sufficient control.
An "associate" is defined as an officer, director, or managing member of the applicant; any owner of 20% or more of the applicant; any person or entity that controls or has the power to control the applicant; or any other person or entity determined by the SBA to be closely connected to the applicant. All owners of 20% or more must provide an unconditional personal guaranty.
A business is owned 40% by John, 30% by Sarah, 20% by Mike, and 10% by a passive investor, Lisa. John, Sarah, and Mike must provide personal guarantees. Even though Lisa is an owner, she may not be required to guarantee if she holds less than 20% and has no control.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Affiliation and Lending Criteria for SBA Business Loan Programs - Final Rule
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
More on personal guarantees & affiliation
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