Partnering on a deal with SBA PG

searcher profile

September 18, 2023

by a searcher in San Francisco, CA, USA

I find myself in a situation where I'm partnering on a deal with SBA financing, and it appears that I'm the only one in a position to provide a personal guarantee. In the arrangement, I'll be owning less than 49% of the business, while my partner will hold 51% and take on the role of owner-operator, leaving me in a strategic/CEO capacity ( I am not in position to be owner-operator).

I'm looking for guidance and insights regarding the pros and cons associated with this type of arrangement. If anyone has had a similar experience, I would greatly appreciate hearing about your insights and lessons learned.

Thank you in advance for your assistance.

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
I would be more than happy to have a discussion on this issue. If you are use SBA financing. anyone who owns 20% or more of the business would be required to sign a personal guarantee, including your partner. So you would not be the only guarantor. You can ping me here or directly at redacted if you would like to talk about what a personal guarantee means.
commentor profile
Reply by a lender
from University of North Carolina at Wilmington in Wilmington, NC, USA
We'd love to learn more about the WHY behind this structure. I think that will help brainstorm how or if we can use the SBA program to fund the acquisition. Reach out to redacted if you'd like to chat through your strategy.
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