SBA rules · SOP 50 10 8.1
Can a business owned by a trust get an SBA loan?
Yes, a business owned by a trust or a trust acting as an Eligible Passive Company (EPC) can qualify for an SBA loan, provided the trustors meet program eligibility and all required trust and personal guaranties and certifications are executed.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- Applicant owned by a trust: When one or more trusts (revocable or irrevocable) own 20% or more of the applicant in the aggregate, each trust must provide an unlimited full guaranty executed by the trustee, and the trustor must also personally guarantee the loan. All donors to the trust are deemed to have trustor status for eligibility purposes, and the trustee must provide the required trust certifications.
- Trust eligibility and exclusions: The eligibility status of the trust is determined by the eligibility of the trustor, and all trustors, guarantors, and 20% owners must meet citizenship and residency requirements. In addition, if the applicant business is owned by a trust, a SAM.gov exclusion search must be documented in the file for any living trustor.
- Trust as or owning an EPC: An Eligible Passive Company (EPC) may take the legal form of a trust or be owned in whole or in part by a trust, and the trust itself is not required to be small under SBA size standards. Each holder of an ownership interest of at least 20% in the EPC or operating company must guarantee the loan, with the trustee executing on behalf of the trust.
- EPC trust conditions and certifications: The trustee must warrant and certify that the trust will not be revoked or substantially amended during the loan term without SBA's prior written consent, the trustor must personally guarantee the loan, and any beneficiaries exercising control over the trust must also guarantee the loan. For 504 loans, the trustee must also certify in writing to its authority to act, borrow, pledge assets, and lease the property, and provide a complete list of all trustors and donors.
The source
What the SOP says
“When one or more trusts (revocable or irrevocable) own, in the aggregate, 20% or more of the applicant, each trust must provide an unlimited full guaranty.
“The trustee must execute the guaranty on behalf of the trust and provide the certifications required in Section A, Ch 2, Para. A.2., Conditions that apply when the EPC is owned in whole or in part by a trust. In addition, when a trust guaranty is required, the Trustor must also personally guarantee the loan. All donors to the trust will be deemed to have Trustor status for eligibility purposes.
“The eligibility status of the Trustor will determine trust eligibility.
“All donors to the trust will be deemed to have Trustor status for eligibility purposes.
“The Trustee must warrant and certify that the trust will not be revoked or substantially amended for the term of the loan without the prior written consent of SBA.
“The Trustor must personally guarantee the loan.
“Beneficiaries that exercise any control over the actions of the trust also must guarantee the loan.
“Each holder of an ownership interest constituting at least 20% of either the EPC or the OC(s) must guarantee the loan (if the holder is a trust, then the Trustee shall execute the guarantee on behalf of the trust).
“The trust itself does not have to be small by SBA size standards.
“Living Trustor (if the Applicant business is owned by a trust);
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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.