California Contractor License Requirements & SBA Loans – How Did You Handle It?

June 25, 2025

by a searcher from University of California, Berkeley - Haas School of Business in San Diego, California, United States

We’ve been evaluating several home services businesses in California, and a recurring theme is that most of them require a California Contractor’s License (often a specific classification like C-27, D-52, etc.) in order to operate and to qualify for an SBA loan. For those of you who’ve acquired a business with this kind of license requirement: - Did you or your partner already hold the license? - Were you able to satisfy the requirement using an RME (Responsible Managing Employee) or RMO (Responsible Managing Officer)? - How did that impact your SBA loan qualification or close timeline? Curious to hear how others navigated this. Any advice or real-world examples would be super helpful!

Reply by a searcher
from Arizona State University in Los Angeles, CA, USA

Thanks for the tag Luke! I’ve been running into the same challenge while evaluating several trades-focused businesses here in SoCal. From what I’ve gathered, SBA lenders typically require that someone on the ownership or management team hold the license either directly (as the buyer) or via a formal relationship with an RMO or RME. I’ve had a few conversations with licensed operators open to partnering as an RMO, but once equity is involved (20%+), the SBA guarantee conversation gets more complicated. Curious to hear how others structured this, especially if anyone closed with a non-owner license holder or a creative workaround.

Reply by a searcher
from United States Air Force Academy in Escondido, CA, USA

Hi Justin, I have a B license and am acquiring a contractor, although not with an SBA loan. I can speak to RME and RMO structures and what I've seen work in my previous roles if you're interested.

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