^redacted‌ thank you for tagging me. I would be happy to jump on a call to see if we can find a way to make something work. But for the sake of the rest of the community, the partner would not be able to have any ownership interest at all. The fact they have defaulted before will come back on a search and kill the deal. Getting their equity into the transaction is going to be a problem. Unless they gift you the funds, I do not know how else you could justify cash coming from them, and a large gift a lender will likely want an explanation for if they are not family. If you make them a key employee, the issue could also come up. So you would not want them involved at all at time of closing.

If they previously defaulted on an SBA loan and the SBA incurred a loss, then they could reach out to the SBA and agree to payoff that loss. If they pay what the SBA lost on the transaction, they would become eligible for SBA financing again. I have had clients that experienced losses many years ago do this and they were then eligible for SBA financing again.

Just so everyone is aware, an offer and compromise with the SBA does not resolve SBA eligibility unless that compromise fully satisfies the loan. If there is an offer and compromise and the SBA still takes a loss (pays out on their government guarantee), that loss is then on the record with the SBA and even though you did an offer & compromise, you are still not eligible to borrow from the SBA going forward. You would need to payoff that loss to be eligible again.

I hope this helps. You can reach me at redacted if you would like to discuss further.

Thank you for the tag ^redacted‌. I completely concur with Brad's guidance and comments. If you'd like to further discuss, please reach out.