Glossary · Reading the business
Minority Ownership
In short
This means owning less than 50% of a business. It's crucial because an SBA loan requires individuals or entities with 20% or more ownership to personally guarantee the loan.
What it means in a deal
As a buyer, if you have a partner who will own less than 20%, they generally won't be required to provide a personal guarantee. However, if they own 20% or more, they must sign on as a guarantor. Understand your partners' equity positions.
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 Minority Ownership
- Does the SBA permit a seller to retain a minority ownership stake while holding a standby note?
- Can an SBA 7(a) loan be used to buy out a minority partner with less than 20% ownership?
- What is required if the seller in a change-of-ownership 7(a) loan transaction retains a minority equity stake?
- Can an SBA 7(a) loan be used to purchase a business if the seller will retain a minority ownership stake?
- When can a minority equity stake still create affiliation for size purposes?
- When does a minority equity stake still create affiliation for size purposes?
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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