Partial Ownership Change Structuring Point

Hi all,

Happy Holidays! I just wanted to make a post about a particular structure I ran into that I was personally not aware of so I figured other people could benefit from it regarding partial change of ownership with SBA.

In a partial change of ownership, if there is a new buyer (not seller) that owns less than 20% they would be required to be a co-borrower. Typically, through SBA, anyone under 20% does not need to guarantee, but only in this case they must be a co-borrower. In the situation I had, the buyer had a partner exchanging equity for cash. The note from the SOP is one line and reads as follows, "Both the business and the individual owner(s) who is acquiring the ownership interest must be co-borrowers on the new loan."

Please also reach out with any SBA lending needs. Let's make 2025 a year to remember!