SBA rules · SOP 50 10 8.1

Can my minor child own part of a business that gets an SBA loan?

A minor child may hold an ownership interest in an applicant business only if it is less than 20%, as SBA strictly prohibits businesses where a minor child owns 20% or more because minors are legally prohibited from providing a personal guaranty.

Quoted from SBA SOP 50 10 8.1Every quote checked word for word

In detail

Ownership cap and legal capacity: A minor child cannot own 20% or more of an applicant business because minors are legally prohibited from providing a guaranty.
Aggregation of ownership: Ownership percentages of married spouses and minor children must be combined when determining total ownership interest and entering applicant data into the SBA Loan System.
Spousal guaranty requirements: While a minor child cannot execute a guaranty, any spouse owning less than 20% must personally guarantee the loan in full when the combined ownership of both spouses and minor children reaches 20% or more.
Collateral and financial disclosures: When an individual alone or together with a spouse or minor children owns 20% or more, lenders must consider liens on personal real estate held individually or jointly with minor children, real estate transfers to minor children within 6 months are not exempt, and personal financial statements must include minor children's assets.

The source

What the SOP says

“SBA prohibits businesses where a minor child owns 20% or more of the business because minors are legally prohibited from providing a guaranty.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Documenting Applicants’ Eligibility (lines 542-547)✓ Verified

“The ownership percentage of married spouses and minor children must be combined.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Documenting Applicants’ Eligibility (lines 542-547)✓ Verified

“Each spouse owning less than 20% of an Applicant must personally guarantee the loan in full when the combined ownership interest of both spouses and minor children is 20% or more.

SOP 50 10 8.1, Chapter 5: Other Core Requirements > Guaranty of Spouse: (lines 1350-1353)✓ Verified

“When an individual alone or together with a spouse or minor children owns 20% or more of the Applicant, the Lender must consider taking as collateral liens on personal real estate (including commercial and investment properties not occupied by the Applicant) that is owned individually or jointly with that spouse or minor children.

SOP 50 10 8.1, Appendix 19: 7(a) Collateral Requirements > The loan must be fully secured (lines 5642-5656)✓ Verified

“Real estate transferred by and Applicant owner to a non-owning spouse or minor children within 6 months of application are not exempt from collateral consideration.

SOP 50 10 8.1, Appendix 19: 7(a) Collateral Requirements > The loan must be fully secured (lines 5657-5657)✓ Verified

“Owner Financial Statement for all owners of 20% or more (including the assets of the owner’s spouse and minor children), and proposed guarantors, except Supplemental Guarantors, Lenders may use SBA Form 413 or their own equivalent form signed and dated within 90 days of submission to SBA.

SOP 50 10 8.1, Appendix 20: Submission of Application for Guaranty > SBA Form 1919 (lines 5750-5760)✓ Verified

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