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Business Ownership Percentage For Loans

Business ownership percentage is very important for obtaining business loans.  If one owner has less than 80% ownership in a business, they usually cannot close the loan by themselves.  Many lenders want 100% ownership.

Apply below for programs that allow less than 100% ownership to close a business loan.

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Get a business loan that does NOT require 100% ownership in your business.

  1. 100% Ownership is not needed for business loans.
  2. Ownership as low as 25% for some bank statement loan programs.
  3. 1 Owner can sign in many cases.
  4. Other owners do not need to sign.
Business Funding with low ownership of the business

Top 7 Benefits:

1. Business loan programs that fund with less than 100% business ownership.

Get approved and also be able to close the loan with less than all the owners applying and signing on the note.

2.  1 owner may be able to close without other owners

Another benefit is the other owners do not need to sign. Therefore, you don’t have to negotiate with them and convince them to sign on the loan.

3.  1 Owner can make decisions on amounts, terms and closing conditions.

You can make all the decisions on the company loan even though you are only one of the owners. Decide how much to borrow, for how long and any other options offered by the lender.

4.  The other owners do not provide a personal guarantee.

The personal assets of the non signing owners are protected. Many business owners are not spouses or family members and their assets are separate when applying.

The personal assets of other owners will not be at risk under the loan. This is significant. Other owners often hold Real Estate and other assets separately.

Related Business Ownership percentage issues

Decision making.

When there are several owners with similar ownership percentages, it is difficult to do many basic business transactions such as sales with vendors, contracts and contract changes.

Ownership share of assets in a business.

Assets that are in the business name are owned by all owners of the business.  As a result, decide which new assets should be added to the business.

Selling, negotiating, or transferring joint business assets

Assets in a business name with multiple owners must have the approval of all owners for any changes. All owners must agree and sign for the sale, transfer and any loan against an asset.

Any owner excluded from the sale invalidates the sale.

Selling the business with multiple owners.

All owners must approve and sign any sales contract when the business is sold.   One owner cannot sell the business alone.

Ownership control of Checking and savings accounts

Checking, savings and other business accounts can be opened without all owners.  Authorized signer information is keep on file by financial institutions.

One signer also cannot remove another signer from a business account. Other signers must agree to their own removal. Owners should check what the banks’ rules are for making changes.  Changes such as closing an account, withdrawing money are difficult later without specific documentation.

Changing ownership percentage.

Update the articles of incorporation or organization to increase or decrease ownership percentages. The articles may vary by state.
Many times, corporate articles do not list percent ownership or percentage shares owned. Most articles list principals such as President, Vice president, CEO and officers.   The lender does not know the ownership breakdown.

A big reason businesses fail is disputes between owners, including who has the authority to make decisions and transact business. Including specific ownership percentages and shares owned eliminates many future disputes.  New corporations should include this information in their paperwork.

Use addendums and corporate change paperwork to add this information.  Another option is to add a notarized corporate change resolution or additional information page.  File these with the Secretary of State.


FAQ: Frequently asked Questions:

Do I need 100% ownership to get a business loan?

100% ownership is not always needed to get a small business loan. Programs are available with percent ownership below 80% and as low as 25 in some cases.%.

Does my business partner have to sign if they don’t want to?

Business partners do not have to sign when the other owners have enough ownership.  Ask the lender what is required to close the loan.

Can I remove my partner from the business to get a loan?
You can remove your partner from the business without their approval.  Consider removing other owners from the business if allowed by the lender.  Lenders do not want quick changes just to get the funding.

Conclusion: Business loans closed with one owner have major advantages

As described, one owner with the authority to close a business loan has many advantages. They can make all the decisions on their own. They do not have to discuss and get agreement from other owners, which is often a major hurdle.  This  includes financing and applying for business loans.

Choose a small business loans that funds and closes with one owner. Find out the requirements from the lender and make changes to your company profile for insufficient ownership, if needed.