SBA Personal Guarantee Requirements
Under SOP 50 10 8.1, any individual who owns 20 percent or more of an SBA 7(a) or 504 applicant must give an unlimited full guaranty, and for applications received by SBA on or after 1 October 2026 the Trustor must also guarantee personally whenever a trust must guarantee, revocable or not. A trust must guarantee when one or more trusts together own 20 percent or more of the applicant; SOP 50 10 8's trust sentence reached the Trustor if the trust was revocable. Spouses and minor children are combined for the 20 percent test, and a six-month lookback covers owners who drop below it. SBA Form 148 covers "all amounts owing under the Note", so four 25 percent owners of a $1,500,000 loan each guarantee $1,500,000 at closing.
This is general information, not legal or lending advice. We are not a lender, a Certified Development Company (CDC) or attorneys. SBA or your lender may require more guaranties than these, and the effect on jointly held property is a state law question for counsel. Confirm who signs with your lender or CDC.
Who has to personally guarantee an SBA loan?
Any individual who owns 20 percent or more of a 7(a) or 504 applicant, directly or indirectly, must give an unlimited full guaranty, and each loan needs at least one guarantor even when nobody reaches 20 percent.
13 CFR 120.160(a): "Holders of at least a 20 percent ownership interest generally must guarantee the loan." SOP 50 10 8.1, Section A, Chapter 5, Guaranties, begins:
Each loan must be guaranteed by at least one individual or entity. If no one individual or entity is a direct and/or indirect owner of 20% or more of the Applicant, at least one of the owners must provide a full unconditional guaranty.
The form is "SBA Form 148 or, for 7(a) loans, equivalent Lender’s form". A person who signed the Note as a Borrower in an individual capacity does not also have to sign a personal guaranty. For 7(a) Export Working Capital Program loans, Appendix 19 says personal guaranties of all owners of 20 percent or more are "generally required, but may be waived by the Director, International Trade Finance (D/ITF)".
The lender must obtain a personal financial statement from each individual guarantor other than a Supplemental Guarantor, "dated within 90 days of loan approval". An SBA-required guarantor who is an Ineligible Person makes the applicant ineligible, with an exception for certain limited or supplemental guaranties; see SBA ineligible businesses.
What changed for trusts on 1 October 2026?
Trusts are now added together for the 20 percent test, and the Trustor must personally guarantee whenever a trust guaranty is required, revocable or not. SOP 50 10 8.1, Section A, Chapter 5, Corporate/Other Guaranties:
When one or more trusts (revocable or irrevocable) own, in the aggregate, 20% or more of the applicant, each trust must provide an unlimited full guaranty.
It continues: "In addition, when a trust guaranty is required, the Trustor must also personally guarantee the loan. All donors to the trust will be deemed to have Trustor status for eligibility purposes." The trustee signs for the trust. The Trustor, in our words and not the SOP's, is the person who created the trust, often called the grantor or settlor.
The SOP 50 10 8 paragraph ended: "In addition, if the trust is revocable, the Trustor also must guarantee the loan." Under SBA Information Notice 5000-882227, SOP 50 10 8 still governs 7(a) and 504 "applications submitted through September 30, 2026". Where an Eligible Passive Company is owned in whole or in part by a trust, both editions already required the Trustor's guaranty (see also 13 CFR 120.111(b)).
| Chapter 5 guaranty paragraph | SOP 50 10 8 | SOP 50 10 8.1 |
|---|---|---|
| The 20 percent test | A trust that owns 20% or more | One or more trusts that own 20% or more in the aggregate |
| The Trustor's personal guaranty | If the trust is revocable | Whenever a trust guaranty is required |
Worked example. A founder holds 15 percent, two irrevocable trusts she created hold 55 percent and 10 percent, and a partner holds 20 percent: 15 + 55 + 10 + 20 = 100. Under SOP 50 10 8.1 both trusts guarantee, the smaller because trusts are counted in the aggregate; the founder guarantees personally as Trustor; and the partner guarantees as a 20 percent owner. Under SOP 50 10 8 the trust sentence did not reach the 10 percent trust, which is under 20 percent, and the Trustor sentence did not reach the founder, whose trusts are irrevocable.
Does my spouse have to guarantee an SBA loan?
If your spouse owns any share and the two of you, with your minor children, own 20 percent or more together, yes, in full. If your spouse owns nothing, the lender must require the spouse's signature on the appropriate collateral documents (see SBA collateral requirements), and the SOP says: "The spouse’s guaranty secured by jointly held collateral will be limited to the spouse’s interest in the collateral." The owner spouse rule:
Each spouse owning less than 20% of an Applicant must personally guarantee the loan in full when the combined ownership interest of both spouses and minor children is 20% or more.
That sentence sets no 5 percent floor, a figure sometimes attached to this rule, and reads the same in SOP 50 10 8. Chapter 1, Paragraph F adds: "SBA prohibits businesses where a minor child owns 20% or more of the business because minors are legally prohibited from providing a guaranty."
Example: spouses own 17 percent and 3 percent and an unrelated partner owns 80 percent. Combined, the spouses hold 17 + 3 = 20 percent, so each guarantees in full, as does the partner.
Is my SBA personal guarantee limited to my ownership share?
No, not if you own 20 percent or more: a guaranty on SBA Form 148 (10/98) covers the whole Note.
Guarantor unconditionally guarantees payment to Lender of all amounts owing under the Note. This Guarantee remains in effect until the Note is paid in full.
Paragraph 9.D: "All individuals and entities signing as Guarantor are jointly and severally liable." In dollars, for four equal owners of a business borrowing $1,500,000:
| Owner | Ownership | Ownership share of $1,500,000 | Form 148 guaranty at closing |
|---|---|---|---|
| A | 25% | $375,000 | $1,500,000 |
| B | 25% | $375,000 | $1,500,000 |
| C | 25% | $375,000 | $1,500,000 |
| D | 25% | $375,000 | $1,500,000 |
What is a limited guarantee, and when is SBA Form 148L used?
A limited guaranty limits the guarantor's liability in one of seven ways set out in paragraph 4 of SBA Form 148L (10/98), and the lender must choose one. SBA's page for the form says owners of less than 20 percent "may provide a limited or full guaranty of the loan", and 13 CFR 120.160(a) lets SBA or a delegated lender require full or limited guarantees from others regardless of ownership percentage.
| Box on Form 148L | What the guaranty covers |
|---|---|
| Balance Reduction | All amounts owing until the total falls below a stated figure, if the Note is not in default |
| Principal Reduction | The same, measured on outstanding principal |
| Maximum Liability | A stated dollar amount |
| Percentage | A stated percentage of all amounts owing when demand is first made, "plus the same percentage of any accrued interest and other costs charged to the Note after demand" |
| Time | All amounts owing for a stated number of years after the date of the Note; if the Borrower is then in default, until all defaults are cured |
| Collateral/Recourse | The amount the lender obtains from listed collateral the guarantor pledges |
| Community Property or Spousal Interest | The guarantor's community property or spousal interest in pledged collateral |
Can I reduce my ownership below 20 percent to avoid the guarantee?
Not by a change made in the six months before the loan application, unless you leave the business completely; and in a 7(a) partial change of ownership, a selling owner left below 20 percent still guarantees in full for at least two years. The six-month lookback rule:
Any Person (as defined in 13 CFR 120.10) subject to the guaranty requirements 6 months prior to the date of the loan application would continue to be subject to the requirements even if that Person has changed their ownership interest to less than 20%.
The SOP lists two exceptions. The first is complete divestiture before the date of application, which includes "divestiture of all ownership interest and severance of any relationship with the Applicant (and any associated Eligible Passive Company) in any capacity, including being an employee (paid or unpaid), for the life of the 7(a) or 504 loan".
The second is for 7(a) partial changes of ownership, which use post-sale ownership percentages. Appendix 15 excepts a selling owner who keeps less than 20 percent: outside ESOP transactions (next table), that owner "must provide a full guaranty for the full loan amount pursuant to 13 CFR 120.160(a)" for "at least two years after final loan disbursement", with release only if the loan has been current for the 12 consecutive months before it; the lender may use Form 148L. See our SBA loan to buy a business page.
Does a holding company, ESOP or 401(k) plan have to guarantee an SBA loan?
A holding company or other entity at 20 percent or more must: "All entities that have direct and/or indirect ownership of 20% or more of an Applicant must provide an unlimited full guaranty." Section A, Chapter 2 adds:
| Situation | Rule |
|---|---|
| Employee Stock Ownership Plan (ESOP) | SBA does not require the ESOP to guarantee a 7(a) or 504 loan (for 504, Section C, Chapter 1), and owners outside the ESOP stay subject to the guaranty requirements. For 7(a) loans, "members of the ESOP are not required to personally guarantee the loan", and if the seller remains as a partial owner, "the seller must provide a full, unlimited guarantee regardless of percentage of ownership", a statutory requirement. |
| A 401(k) plan, including a ROBS plan, is an owner | The lender must obtain "the full unconditional guaranty of the sponsor(s) of the 401(k) plan regardless of the sponsor’s individual ownership interest in the Applicant concern". See SBA equity injection requirements. |
| Eligible Passive Company (EPC) and Operating Company (OC) | "Each holder of an ownership interest constituting at least 20% of either the EPC or the OC(s) must guarantee the loan" (also 13 CFR 120.111(a)(6)) |
What does your SBA business plan have to show about guarantors?
Who owns what, through whom, and who will sign. Chapter 1 has the lender enter "100% of the Applicant’s direct and indirect owners" into the SBA Loan System, so your ownership section should show:
- An ownership table that adds to 100 percent, naming the individuals behind every entity.
- Spouses and minor children grouped, for the combined 20 percent test.
- Each trust with its trustee, Trustor and donors.
- Ownership changes in the six months before application, with dates.
- A guarantor schedule: name, percentage, and full or limited.
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How we verified this
Every quotation was re-checked against the raw text on 10 October 2026.
- SBA SOP 50 10 8.1, effective 1 October 2026: Section A, Chapters 1, 2 and 5, Section C, Chapter 1, and Appendices 15 and 19. Read from the current posting on sba.gov, which SBA's page dates 7 October 2026.
- SBA SOP 50 10 8, effective 1 June 2025, for the superseded trust sentence and the spouse sentence: the Word file on sba.gov.
- SBA Information Notice 5000-882227, published 25 September 2026, for the cutover between editions.
- 13 CFR 120.160 and 120.111: the annual edition revised as of 1 January 2025, the most recent on govinfo.gov, which matched the current Legal Information Institute text (linked) on 10 October 2026. We found no later Federal Register rule amending either section.
- SBA Form 148 (10/98) and Form 148L (10/98): the PDFs linked from SBA's pages for Form 148 and Form 148-L, which linked the same files on 10 October 2026.
Not verified, so not here: the terms of lenders' own guaranty forms; release of other guarantors after closing; Microloan and disaster loan guaranty rules; how indirect ownership is calculated for the 20 percent test; and state community property or homestead law.
Frequently asked questions
Who has to sign a personal guarantee on an SBA loan?
Under SOP 50 10 8.1, any individual with direct or indirect ownership of 20 percent or more of a 7(a) or 504 applicant must provide an unlimited full guaranty. If nobody reaches 20 percent, at least one owner must still give a full guaranty.
Does a spouse have to personally guarantee an SBA loan?
Under SOP 50 10 8.1, each spouse owning less than 20 percent of the applicant must guarantee the loan in full when both spouses and their minor children together own 20 percent or more. There is no 5 percent floor. For a non-owner spouse, the SOP says the spouse's guaranty secured by jointly held collateral is limited to the spouse's interest in that collateral.
What changed for trusts in SOP 50 10 8.1?
For 7(a) and 504 applications received by SBA on or after 1 October 2026, SOP 50 10 8.1 adds trusts together for the 20 percent test and requires the Trustor to personally guarantee whenever a trust guaranty is required. SOP 50 10 8's trust sentence required it if the trust was revocable.
Can I avoid an SBA personal guarantee by dropping below 20 percent ownership?
Not within six months of applying. Under the six-month lookback in SOP 50 10 8.1, anyone subject to the guaranty requirements six months before the loan application stays subject after dropping below 20 percent, unless they completely divest. In a 7(a) partial change of ownership post-sale percentages apply, but Appendix 15 still has a selling owner left below 20 percent give a full guaranty for at least two years.
Is an SBA personal guarantee limited to my ownership percentage?
Not if you own 20 percent or more of the applicant. SBA Form 148 guarantees payment of all amounts owing under the Note, so four 25 percent owners of a $1,500,000 loan each guarantee $1,500,000 at closing, not $375,000.
This page summarizes SBA SOP 50 10 8.1, 13 CFR 120.160 and the sources listed above as retrieved 5 to 10 October 2026. It is general information, not legal or lending advice. Confirm who must guarantee with your lender and counsel before you sign.