Glossary · People and paperwork
Minority Partner
In short
A minority partner owns less than 50% of the business, meaning they typically don't have controlling interest. For SBA loans, this impacts guaranty requirements.
What it means in a deal
While a minority partner might not have operational control, if they own 20% or more, they are still considered a "key principal" by the SBA and will need to provide a personal guarantee for the loan. Clarify all ownership percentages and their associated responsibilities and guarantees upfront.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
SBA Form 1919 — Borrower Information Form
U.S. Small Business Administration · SBA form
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Minority Partner
- Can I use an SBA 7(a) loan to buy out a minority business partner?
- Can an SBA 7(a) loan be used to buy out a minority partner with less than 20% ownership?
- Can I use an SBA 7(a) loan to buy out a minority business partner who owns less than 20%?
- Can I use an SBA 7(a) loan to buy out a minority partner who owns less than 20% of the business?
- Can an SBA 7(a) loan be used to buy out a minority partner (e.g., 20% stake) from an existing business?
- When can 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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