For SBA lenders
Short answer
The primary factor is whether the seller's retained minority equity stake, typically less than 20%, also comes with 'control' or 'influence' over the business, which could trigger affiliation rules and potentially impact eligibility or the 'change of ownership' nature of the transaction.
While a seller can retain a minority equity stake (less than 20%) without automatically creating affiliation or disqualifying the change of ownership, the lender must assess if the seller retains any control or undue influence through other means (e.g., board seats, management agreements, voting rights). Such control would trigger affiliation rules, combining the seller's other businesses for size determination and potentially altering the loan purpose.
A borrower is acquiring a business where the seller will retain a 15% equity stake. The lender reviews the new operating agreement and finds the seller also has a seat on the board of directors with veto power over major decisions. This indicates 'control,' triggering affiliation review and potentially jeopardizing the pure 'change of ownership' aspect of the loan.
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