Are personal guarantees required?
Yes. Any person who owns or controls 20% or more of the ownership of the business or 20% or more of the real estate (assuming the real estate is held in a separate legal entity) must personally guarantee the Section 504 loan. In the case of a married couple where both spouses have an ownership interest, the couple is treated as one person, e.g., if both spouses own 10% each, both must guarantee. In certain circumstances, persons with less than a 20% ownership may also be required to personally guarantee.
