SBA guarantee for overseas investors

September 16, 2023

by a searcher in Chicago, IL, USA

I have a plumbing company under LOI and I have an investor who lives in Spain who would like to provide me with the 10% equity I need for an SBA loan.

He and his wife are not U.S. citizens but would own 49% of the company. I am assuming that because they live overseas and aren't U.S. citizens that they won't be required to guarantee the loan? Does anyone have any experience with foreign investors and guarantees? Interested to learn whether they would need to provide anything other than the 10% equity.

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

Anyone who owns 20% or more of a business with SBA financing will be required to sign a personal guarantee, even if they are foreigners. However, as they are foreigners keep in mind that in a default situation you are going to be the one that carries the majority of the exposure as it is very hard for a lender to pursue a foreigner. The only way to keep them from signing a personal guarantee would be if they owned less than 20%. I would be happy to have a discussion in more detail on this. You can reach me here or directly at redacted Good luck.

Reply by a lender
from University of Missouri in St. Louis, MO, USA

they would still have to guarantee based on ownership. Bigger question, they are putting in 10% equity but they get 49% of the business? That would probably be something that would need to be addressed as well

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