SBA Acquisition Where Minority Partner Stays?

searcher profile

December 12, 2025

by a searcher from Yale University - School of Management in New Haven, CT, USA

Can anyone advise on the implications for a minority partner if only the majority partner wants to sell and I acquire using SBA financing? Specifically in regard to whether the minority partner would also be subject to a personal guarantee. Does this depend on whether it is a stock sale (i.e. buying only majority partner's stock) or an asset sale (with minority partner getting same % in new business)? Finally, in the event there is a way to do it without the minority partner having a personal guarantee, I assume this would no longer be possible if this partner increased his or her stake, is this correct? I thought I had seen info on this in the past, but I can't seem to find it. Thank you!
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Reply by a lender
from Cornell University in Los Angeles, CA, USA
Hi ^redacted‌ - nice to meet you and happy to answer this question. This would be treated as a partial buyout. Under SBA rules, the minority partner’s personal guarantee depends on their ownership percentage. If they hold less than 20% equity, they will need to personally guarantee the loan for at least two years, and that guarantee can be removed after two years. All you have to do is ask the bank that is managing the loan to remove the guarantee after that period. If they hold 20% or more equity, they will need to personally guarantee the loan for the full term of the loan (for a standard business acquisition without real estate, that’s generally 10 years). This is a requirement from the SBA. We have a lot experience financing various companies via the SBA. If you ever need help talking through a deal, I am happy to help. We work with all the major SBA lenders. The bank pay us after your loan closes, so this is a 100% free service for you.You can email me directly at redacted or schedule a meeting with me: https://cal.com/francodeguzman/30min. Look forward to chatting!
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Reply by an intermediary
from Syracuse University in Leominster, MA, USA
Tom Fagen - The SBA (SOP###-###-#### only requires a guarantee from owners with less than 20% equity if there's a partial ownership change. The Technical release with the SOP mentioned "Search Funding" and stated that any agreements giving non-guaranteeing investors control of the business would disqualify it from receiving an SBA loan. https://www.sba.gov/document/information-notice###-###-#### issuance-sop###-###-#### technical-updates
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