Does 20% PG rule apply to Husband and Wife individually?

intermediary profile

January 17, 2024

by an intermediary from The University of Chicago - Booth School of Business in Chicago, IL, USA

Buyer is buying Company X owned by Husband and Wife (49/51). Can both H and W be investor in Buyer's entity with <20% each and be able to avoid PG? Or does the PG apply to their combined ownership of <20%?

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Great question. Unfortunately the SBA rules state that ownership interest is judged on a household basis. So the lender is required to combine the ownership interest between spouses and make the guarantee decision based on their combined ownership. So combined they would need to own less than 20% of any acquisition or if it is a partial acquisition they would need to maintain less than 20% of the ownership post acquisition to avoid the personal guarantee. Please let me know if you have any additional questions either here or directly at redacted
commentor profile
Reply by a searcher
from Indiana University in Atlanta, GA, USA
Interesting question. ^redacted‌ is my go-to on SBA questions.
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