Glossary · The loan itself
Guaranty Agreement
In short
This is the legal document where you agree to personally repay the SBA 7(a) loan if the business defaults. It makes you, the buyer, personally responsible for the debt.
What it means in a deal
Every owner with 20% or more equity in the acquiring business must sign a personal guaranty. This means your personal assets are on the line if the business fails to pay the loan. Understand the full recourse nature of this document; it's a standard requirement for SBA loans.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Guaranty Agreement
- How does life insurance effectively fund a business buy-sell agreement?
- How does the purchase agreement structure affect an SBA partner buyout?
- How does an operating agreement impact an SBA partner buyout loan?
- What happens if the seller terminates the purchase agreement mid-process?
- What are the specific conditions for an acceptable full standby agreement?
- What if a franchise agreement contains provisions for indemnification that concern the SBA?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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