For SBA lenders
Short answer
A lender cannot waive a required personal guaranty for any owner of 20% or more of the business, or any other individual deemed an 'associate' who controls the business. All such individuals must provide an unconditional personal guaranty.
SBA regulations mandate that all owners of 20% or more of the borrower, and any other person or entity determined to be an 'associate' with control over the business, must provide an unconditional personal guaranty. There are no provisions for waiving this requirement, as it is fundamental to the SBA's 'prudent lending standards' and ensures recourse in case of default.
A lender is underwriting a 7(a) loan for a business owned 30% by Principal A, 30% by Principal B, and 40% by Principal C. The lender must obtain an unconditional personal guaranty from all three principals, as each owns 20% or more. No waivers are permitted for their ownership stakes.
Insider move
Lenders are primarily concerned with ensuring all required personal guaranties are properly executed. Failure to obtain a required personal guaranty is a significant deficiency that will result in a repair or denial of the SBA guaranty, as it represents a fundamental deviation from program requirements.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
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.
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