SBA 7(a) with RME — Feasible?

June 02, 2025

by a searcher from Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) in San Diego, CA, USA

Has anyone successfully used an RME (Responsible Managing Employee) structure to satisfy licensing requirements for an SBA 7(a) acquisition? I'm exploring a business acquisition in California that requires a contractor license. I don't have the required experience to qualify for the license myself yet, so I'm considering using an RME. Would love to hear from anyone who has: - Used an RME to meet licensing requirements - Structured the RME role in a way that satisfied the SBA lender - Dealt with any complications from SBA underwriting or closing because of this Any lessons learned, or structure tips are appreciated!

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

First and foremost, it depends on who the state requires to carry the license. If it has to be with an owner, then an RME will not work. If it can be with an RME, then lenders are going to want to be sure that RME is tied up or you have backup means to keep the license in place, and hopefully a path to get licensed yourself. The more options you have to maintain licensing going forward, the easier it will be to get a lender comfortable. As said above, lenders will require paperwork from the RME and in some cases they might even want a limited guarantee from them. We have worked with creative licensing situations in the past and I would be happy to discuss it. We have over 80 SBA lending partners we place debt with. You can reach me here or directly at redacted

Reply by an intermediary
from Harvard University in San Diego, CA, USA

I have worked sell-side on a few deals with this. Its really all about picking the right lender and being upfront with them about the structure and your plans. Its also great to have other employees that could qualify as the RME (or are on the short track to having the necessary experience.) Generally the lender will require the RME to fill out a form 1919 as well, so the seller or an employee needs to be prepped for that document and it needs to be explained on why they are signing it.

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