SBA rules · SOP 50 10 8.1

Does the SBA look at owners who sold their shares before the loan?

Former owners who reduced their ownership within 6 months of application must guarantee the loan unless they completely divested, while owners of more than 20% who departed within 6 months remain Associates subject to SBA eligibility review.

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

In detail

Guaranty six-month lookback: Any person who was subject to guaranty requirements 6 months prior to the loan application date continues to be subject to the guaranty requirement even if they reduced their ownership below 20%.
Complete divestiture exception: A former owner is excused from providing a personal guaranty only if they completely divest all ownership interest and sever every relationship with the applicant in any capacity, including serving as a paid or unpaid employee, for the life of the loan.
Associate status and eligibility review: An owner of more than 20% equity within 6 months before the loan application date is classified as an Associate, requiring evaluation for ineligible conditions including Prior Loss to the Government, Delinquent Federal Debt, and criminal history.
Ineligible Person lookback: The applicant is ineligible if any direct or indirect owner commencing 6 months prior to loan number issuance is an Ineligible Person, unless that individual completely divests their ownership interest before the loan number is issued.

The source

What the SOP says

“Any Person (as defined in 13 CFR 120.10) subject to the guaranty requirements 6 months prior to the date of the loan application would continue to be subject to the requirements even if that Person has changed their ownership interest to less than 20%.

SOP 50 10 8.1, Chapter 5: Other Core Requirements > Reducing Ownership Interest (Six-month lookback rule): (lines 1359-1360)✓ Verified

“When that Person completely divests their interest prior to the date of application. Complete divestiture includes divestiture of all ownership interest and severance of any relationship with the Applicant (and any associated Eligible Passive Company) in any capacity, including being an employee (paid or unpaid), for the life of the 7(a) or 504 loan.

SOP 50 10 8.1, Chapter 5: Other Core Requirements > Exceptions to the 6-month lookback rule: (lines 1361-1363)✓ Verified

“An officer, director, owner of more than 20 percent of the equity, or Key Employee of the small business;

SOP 50 10 8.1, Appendix 3: Definitions > An Associate of a small business is: (lines 4281-4288)✓ Verified

“For purposes of this definition, the time during which an Associate relationship exists commences six months before the following dates and continues as long as the certification, participation agreement, or loan is outstanding:

SOP 50 10 8.1, Appendix 3: Definitions > An Associate of a small business is: (lines 4281-4288)✓ Verified

“For a small business, the date of the loan application to SBA, the CDC, the Intermediary, or the Lender.

SOP 50 10 8.1, Appendix 3: Definitions > An Associate of a small business is: (lines 4281-4288)✓ Verified

“The Applicant business is ineligible if any direct or indirect owner of the business commencing 6 months prior to the date of issuance of the SBA loan number is an Ineligible Person, unless the Ineligible Person completely divests their ownership interest prior to the date of issuance of the SBA loan number.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Direct/Indirect Owners (lines 533-537)✓ Verified

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