SBA loan basics
Short answer
All owners of 20% or more of the business are generally required to provide a full and unconditional personal guaranty for an SBA 7(a) loan.
The SBA requires personal guaranties from all individuals who own 20% or more of the small business. This ensures that the principals have a personal stake in the business's success and are personally liable for the repayment of the loan. In some cases, other key management or individuals with substantial influence might also be required to guarantee the loan.
A business has three owners: Owner A (40%), Owner B (30%), and Owner C (15%). Owners A and B would be required to personally guarantee the SBA 7(a) loan. Owner C, owning less than 20%, would not typically be required to guarantee.
Insider move
Lenders verify the ownership percentages of the business and ensure all required guarantors sign the personal guaranty. They also assess the financial strength of each guarantor, as their personal assets may be pursued in the event of a default.
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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