Weighing Ownership structure to benefit from Minority Ownership

by a searcher

Mar 13,2023

Under IOI and planning on using SBA 7a. 

My wife will maintain her full-time job and may be able to avoid the personal guarantee (to be determined). 

However, I expect my wife will be working in the business on a part-time basis and we would like to benefit from women owned business advantage to potentially expand into government work. 

Thus, we would need to make my wife the majority owner I believe. From a high level, I am weighing the trade-off of her personal guarantee versus minority-owned advantages.

I don't know a whole lot about minority-owned advantages, so maybe if she is not working FT in the business, we wouldn't qualify regardless. 

Any thoughts?

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2 comments

lender from Eastern Illinois University

I agree with Laura. If she continues to have outside employment it could disqualify her from minority owned status. As for the SBA financing, if she is going to have any ownership at all they will require her to guarantee the loan as well.

It really depends on what industry you are in on whether minority status could impact you. If there are specific government contracts you are aware of that could benefit the company with a minority status, then it might be work looking into. However, if you are not sure if there are any contracts and the business does not currently compete for those type of contracts, it might not be worth the effort. I am more than happy to get on a call and talk through it. You can reach me here or directly at --@----.com

03/14/2023 | like reply | 1 like

professional from Villanova University - Villanova School of Business

For minority-owned advantages it has to meet a number of requirements - majority ownership, majority control, etc. Often times, a business will have to be certified by an independent organization such as WBENC. You may want to look into their requirements. Happy to help if you need support on the legal side of structuring this.

03/14/2023 | like reply | 0 likes

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