Family Business Ownership and Loans: Get It Right on Paper

Many Hispanic businesses are family businesses: spouses, parents, siblings and cousins working together. That is a strength. But on a loan application, who owns what must be clear, written down and true.

Why ownership matters so much

• Eligibility: under the 2026 SBA rule, every owner, including indirect owners, must be a U.S. citizen or national. One family member who is a green card holder makes the business ineligible for 7(a), 504 and Microloans.
• Guarantees: owners with 20% or more usually sign personal guarantees. See personal guarantees.
• Spouses: lenders may ask a spouse to sign certain documents, especially if the spouse has an ownership interest or if personal property is pledged. Ownership by both spouses is counted together in some SBA tests.

Put it in writing

1. Operating agreement or bylaws listing every owner and their percentage.
2. State records that match: your annual report should list the same managers or officers.
3. Tax returns that match: K-1s or Schedule C should reflect the same owners.
4. Roles: who manages daily operations, who signs checks, who makes decisions.

Common family situations

Situation	What to do
A parent “helps” but isn’t officially an owner	Decide: owner (document it) or not (don’t list them). Be consistent everywhere.
A spouse works in the business but owns nothing	Fine. They may still be asked to sign some documents.
A relative put in money years ago	Was it a loan, a gift or an investment? Document it now.
One family member is not a citizen	The business is not SBA-eligible while that person owns any share. Talk to an attorney before changing ownership; changes must be real.

Plan for the future

Write down what happens if an owner leaves, retires or passes away (a buy-sell agreement). Lenders like to see it, and it protects your family.

Get free help organizing your documents from an SBDC advisor: free help in Spanish. Then check eligibility in our quiz.

Frequently asked questions

Does my spouse have to sign my business loan?

Sometimes. Lenders may ask a spouse to sign certain documents, especially if the spouse owns part of the business or jointly owned property is pledged.

Can a family member who isn't a citizen own part of my business?

Yes, but while they own any share, the business is not eligible for SBA 7(a), 504 or Microloans under the 2026 rule.

How should family ownership be documented?

In an operating agreement or bylaws, with state records and tax returns that show the same owners and percentages.