Reality vs. By the Letter for SBA 7a PG

searcher profile

May 22, 2022

by a searcher in Tampa, FL, USA

My networth is a bit light in the saddle for my acquisition and my brother who is not into ETA but into helping me out wants to get a bit more clarity/comfortability around what PGing means for him.

He owns home but has less than 20% equity in it. Has company 401k. Has personal savings/checking accounts. Has vehicle.

In reality, based on the above would his PG only put his personal savings/checking accounts and vehicle at risk in SBA liquidation scenario or what else could be grabbed?

Any RL insight would be greatly appreciated.

Thank you

^redacted‌, ^redacted‌, ^redacted‌, ^redacted‌‌

1
4
153
Replies
4
commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Happy to have a discussion with you and go through potential exposures and how the guaranty works. The reality is even if there is insufficient equity in the home today for the SBA to require the lender to take a second mortgage on the house, any personal assets owned by your brother with just a few exceptions could be exposed by the personal guarantee. This would include non-retirement liquid assets (such as brokerage accounts, cash, savings, etc. in his name), equity in his home or any other investment properties, and in theory equity held in other businesses. However, the truth of the matter is in most cases if the Borrower and Guarantors work with the SBA in a liquidation scenario they can come to an Offer & Compromise and settle the personal guarantee without the SBA suing legally. It is very expensive to sue someone and then collect on the judgement. Most lenders prefer to work out of a guarantee versus suing to collect. The biggest long-term issue is if the SBA has a loss, that would impact any guarantors ability to borrow from the SBA in the future unless they eventually payback that loss to the SBA. Happy to discuss your specific situation at any time and you can reach me at redacted
commentor profile
Reply by a searcher
from Columbia University in New York, NY, USA
Following x 2
commentor profile
+2 more replies.
Join the discussion