For SBA lenders
Short answer
If the seller remains as a passive investor with a minority equity stake, the lender must confirm there is no ongoing 'control' or 'affiliation' to maintain eligibility and ensure an arm's-length transaction.
For a change of ownership, the seller should generally divest themselves of ownership and control. If a seller retains a minority equity stake (less than 20%), the lender must carefully document that the seller has no active role in the business's management, no board seats, no special contractual rights, and no ability to control the business's operations or finances, which could trigger affiliation or indicate a non-bona fide change of ownership.
Mr. A sells 85% of his business to Mr. B, retaining a 15% passive equity stake. The lender would require a signed agreement confirming Mr. A has no management role, board representation, or special voting rights. The lender would also ensure the 15% stake does not confer any undue control to Mr. A, as this could impact eligibility and affiliation.
SOP 50 10 - Lender and Development Company Loan Programs
13 CFR Part 121 - Small Business Size Regulations
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 change-of-ownership underwriting
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day