SBA Loan Program for Employee Trust Companies

The SBA loan program for employee trust companies seeks to provide financial assistance to qualified employee stock ownership plans (E.S.O.P.) by acting as guarantor for a percentage of the loan.  

E.S.O.P.

The purpose of an employee stock ownership plan is to acquire stock from an employer or selling shareholder in order to distribute it among individual employees. Those responsible for managing the E.S.O.P., called trustees, place some of this stock into individual employee accounts that are held by a trust. Put simply, an E.S.O.P. is a trust, managed by a legal third party entity, with the assets divided up into individual accounts.

Which Employee Trust Companies are Qualified?

In order to qualify for this assistance, the employee trust must be part of the plan sponsored by the employer company. It is obliged to meet the requirements and conditions for E.S.O.P.s as prescribed in all applicable Internal Revenue Service, Department of Labor and Treasury regulations. Furthermore, the small business must also provide all the funds required to establish collateral on and repay the loan.

What is the Purpose of the Loan and its Amount?


The maximum loan amount designated for E.S.O.P.s is $2,000,000, though the SBA can only guarantee $1,500,000. As a general rule, small loans consisting of $150,000 or less maintain a maximum guarantee of 85%. For any loans larger than $150,000, the SBA only guarantees 75% of the loan.