For SBA lenders
Short answer
A corporate guaranty is required from any entity owning 20% or more of the borrower, or from any entity that directly or indirectly benefits from the loan proceeds, even if less than 20% ownership.
SBA policy mandates personal guarantees from all owners of 20% or more. However, a corporate guaranty is required from entities that are themselves 20% or more owners of the borrower, or if an affiliate benefits from the loan proceeds. This ensures all entities with substantial ownership or financial interest are held responsible for the loan.
Company A, the borrower, is 60% owned by John Doe and 40% owned by Holding Company B. John Doe must provide a personal guaranty. Holding Company B, as a 40% owner, must provide a corporate guaranty for the 7(a) loan.
Lenders must correctly identify all individuals and entities required to provide guarantees, personal or corporate. Overlooking a required corporate guarantor can lead to a guaranty repair or denial, as it weakens the SBA's recourse in the event of default.
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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