SBA Loan with Seller Rolling Equity

intermediary profile

April 15, 2025

by an intermediary from Northeastern University in Minneapolis, MN, USA

Has anyone figured out creative way to let seller roll more than the 15% allowable with an SBA loan? Whether its truly rolling equity or a "back door" method?
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
The SBA now allows transactions both where the seller is rolling equity as well as where the seller is retaining equity with a stock purchase. Technically the maximum equity the seller can hold and avoid a personal guarantee is 19% of the value of the business. If the seller holds more than 19%, then they are required to guarantee the loan. There are some lenders that prefer the seller does not hold more than 15% so they are not coming up against the 20%, but we have done plenty of deals at 19% and have lenders will to do that. Outside of that, there is no official way to allow a seller to hold additional equity. I hope this helps. If you would like to discuss further, you can reach me here or directly at redacted
commentor profile
Reply by a lender
from University of Southern California in Los Angeles, CA, USA
Brad's answer is 100% correct. Lot's of lenders will allow more than 15% but if you approach 20% or more the seller will have to provide PG. In fact, you might even have luck structuring it as a buy-in instead of a buy-out where you the buyer are doing a partial buy-in by buying 70-75% of the business instead of 100%. Can potentially do the deal with 0% down via this structure.
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