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Jason MilleisenParticipant8 months, 1 week ago
I realize this question is from 8 months ago, but your question is a common one, so hopefully others that read this answer will get the information they need.
Regarding your question about having legal grounds to remove your guarantee because you were only a 15% owner, I don’t think that’s going to hold much water. A lender has the right to require a guarantee of any employee or manager of the company regardless of their ownership percentage. While it is true that the SBA requires any owner of 20% or more to personally guarantee, it doesn’t mean that they can’t require someone who has less ownership if they are important to the success of the business.
I also wanted to make mention of something else that is critically important here. In his answer above, Dock is incorrect about how an SBA guarantee works. This is a misconception that I see from time to time. I’ve even written an entire article about it here
An SBA guarantee does NOT relieve you of personal obligation if you sign a personal guarantee. All that a 70% SBA guarantee means is that the lender is reimbursed for 70% of the loan balance at the time of default. It has no bearing on what you owe. So if the loan you take is defaulted on, anyone who personally guaranteed will be liable.
I hope this helps future people who see this post, as understanding what you are signing up for with an SBA is very important. It’s one thing to understand the risks and accept them. It’s quite another to have no idea what the risks are.