SBA lenders willing to not co-sign spouse?

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July 11, 2022

by a searcher in Manhattan Beach, CA 90266, USA

Can anyone recommend SBA lenders who may be willing to do a loan without requiring the spouse to co-sign? I'd like to try to minimize my personal guarantee risk. I understand I may be able to place my house in my spouse's name, and then not have her co-sign. Thus protecting the house. I'm trying to see if this is a proven method.

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Reply by a searcher
from Marymount University in Charlotte, NC, USA
My understanding is that lenders want a personal guarantee so that you will be motivated to enough to work your well best and make sure this venture is successful. Lenders don't want the owner to abandon the venture the moment there is an issue. Lenders don't want to possess the asset because it's a pain to go through that. That is the last thing lenders want to do. They would like to lend money, get the interest and principal paid back. They don't want to get into legal and operational trouble of seizing an asset, putting an auction and selling it. I might be completely wrong but that has been experience talking to lenders. If you are talking about ways to avoid taking responsibility even before you getting the loan, it's a red flag for the lender. They want you to work harder for their money. Simple as that. It's your idea, your business, your due diligence, your effort to ensure you minimize the risk. If you don't want to take the risk on yourself, why are expecting someone else to take the risk on you?
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Reply by a lender
from University of Wisconsin in Madison, WI, USA
If your spouse is on title to your residence, and if you have more than 25% available equity in your house and the loan is not fully secured, the bank is required to take a lien on it. - See Page 258 of the SBA's Standard Operating Procedures (link here: https://www.sba.gov/document/sop###-###-#### lender-development-company-loan-programs-0 )

On your question about transferring the house into your spouse's name, unfortunately there is not a work around.


From the SBA's Standard Operating Procedures (Page 258): "b) Real estate transferred by the Applicant to the non-owning spouse or minor children within 6 months of the date of the application will not be exempt from consideration as available collateral."
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