Hey folks! I am about a month into my search and think I hit my first real obstacle. I've been speaking with a number of lenders and recently learned about the SBA's rule that owners with 20% ownership or greater must provide a personal guaranty on the loan. My search criteria are businesses with $500K+ EBITDA, meaning that my purchase price should be somewhere between $1.5M - $4.0M and thus my loan anywhere from $1.0 - $3.5M. My issue is that I do not have the funds to contribute 20% equity at the upper end of that spectrum. I intend to raise the additional equity, however I know that providing that guaranty will be unacceptable for investors. I am personally comfortable with making the guaranty.

Are there creative solutions to satisfy the 20% rule such that I can provide the guaranty without putting additional owners on the hook? Or am I stuck finding a smaller deal where I have to be largest investor at 20%? Are there other financing avenues that don't require the 20% rule? For illustration, let's assume I have $50K which means that the largest equity infusion I can make on a deal is <$250K. Assuming 90% financing, the biggest deal I could buy is $2.5M. Still sizable, but significantly more limiting than my criteria stated above.