For SBA lenders
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.
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.
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.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
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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