SBA loan: does a spouse also have to provide a personal guarantee?

searcher profile

June 14, 2020

by a searcher from Harvard University - Harvard Business School in McLean, VA, USA

Assuming a spouse has no equity stake in the business, will an sba loan require a personal guarantee from both the entrepreneur and his / her spouse? I understand that this might have to be examined on a case by case basis and a lot will depend on things such as the value of the entrepreneur’s assets, his / her credit history, as well as the assets that the relevant business will own (and hence can be encumbered) but any input from people who have had to deal with this in the past will be greatly appreciated (for simplicity, I’m assuming an asset light business i.e. no material assets to place as collateral and an SBA loan of no more than $5m).

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commentor profile
Reply by a lender
from Washington University in St. Louis in St. Louis, MO, USA
If jointly held real estate is pledged as collateral for the SBA loan, the spouse, who is not on the SBA loan but owner of the real estate used as collateral, would have to sign a limited guaranty relating to the real estate. In states such as Texas which is a homestead state, the lender cannot place a lien on the borrower's primary residence.
commentor profile
Reply by a lender
in Yorba Linda, CA, USA
In this example, the spouse would not have to sign a PG other than if a jointly owned piece of real estate were being pledged as collateral. In that event, the spouse would sign a limited personal guaranty limited to their interest in the collateral property.
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