PG exclusions on SBA loans

searcher profile

November 09, 2021

by a searcher from University of Massachusetts at Amherst in Philadelphia, PA, USA

What, if any, asset exclusions are allowed in Personal guarantee agreement on a SBA loan ie - IRA/ 401k/ 529? How is joint assets or property with spouse handled - ie investment portfolio / house equity etc) handled?

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commentor profile
Reply by a lender
from University of Missouri in St. Louis, MO, USA
Nick is correct. Retirement assets aren’t considered liquid for SBA purposes, or really even for bank purposes generally until you hit 59 1/2 years of age. The house pledge is only required if you have >25% equity but a bank can always require it as collateral if we want. Understand on an SBA loan there isn’t a time component where the PG goes away. So the likelihood is that while these assets might be protected, you are still likely in bankruptcy if things go haywire. So some assets might be carved out but there would still likely be legal issues for years to come.
commentor profile
Reply by an intermediary
from Queens University of Charlotte in Charlotte, NC, USA
My two cents, get a home equity line (a 2nd lien) on your primary or even secondary residence before application. They will take best available position, and if you have both a mortgage and home equity line it leaves a 3rd position only which is pretty benign.
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