For an SBA-backed loan, a Texas LLC needs a written company agreement — the document Texas law calls a company agreement and the SBA calls an operating agreement — that is signed by every member and contains specific clauses the SBA looks for: clear authority to bind the LLC, ownership percentages that match the SBA’s forms exactly, restrictions on transferring membership interests, and veto or supermajority provisions carefully drafted to avoid SBA affiliation problems. The Texas LLC operating agreement requirements for SBA loans sit on top of state law, not inside it, and most denials and delays come from agreements that satisfy Texas but miss what the federal reviewer expects.
Why a Written Agreement Is Non-Negotiable for the SBA
Texas does not require a written company agreement to form or maintain an LLC. Under the Texas Business Organizations Code, a company agreement can be written, oral, or implied, and a single-member LLC’s agreement is enforceable even though only one person is party to it.1State of Texas. Texas Business Organizations Code 101 – Limited Liability Companies If you never write anything down, your LLC runs on the default rules in Chapter 101.
The SBA treats things differently. Under Standard Operating Procedure 50 10, organizational documents are a mandatory submission so the agency can verify the borrowing entity’s legal structure, ownership, and management authority before guaranteeing a 7(a) or 504 loan.2U.S. Small Business Administration. Lender and Development Company Loan Programs An oral or implied agreement cannot be reviewed, so if your LLC has operated without a written agreement, you need to produce one before the lender will move forward.
One quirk of Texas law shapes the drafting work: amending a company agreement requires unanimous member consent unless the agreement itself sets a different procedure.1State of Texas. Texas Business Organizations Code 101 – Limited Liability Companies If the lender later asks you to add a clause your original agreement omitted, you will need every member’s signature to make the change. Build in an amendment procedure now, and include the SBA-specific clauses from the start.
SBA-Specific Clauses the Agreement Must Contain
Authority to Bind the LLC
The agreement must explicitly name who has power to sign legal documents on behalf of the company. If the person signing the SBA promissory note is not clearly authorized in the operating agreement, the lender cannot confirm the company is legally obligated to repay. The clause has to match the management structure the Certificate of Formation declares: in a member-managed LLC, it names the managing member; in a manager-managed LLC, it names the appointed manager or managers.
Ownership Percentages That Match the SBA Forms
Ownership in the agreement must align exactly with SBA Form 1919, the Borrower Information Form that collects owner details for 7(a) loans.3U.S. Small Business Administration. Borrower Information Form A percentage rounded differently, or a member listed on one document but not the other, can trigger delays or denial. The 504 program’s application forms carry the same disclosure, and the same consistency requirement applies.
Transfer Restrictions on Membership Interests
The agreement should restrict the transfer of membership interests without the lender’s consent. The SBA needs confidence that the people who qualified for the loan will stay in control for its duration. Unrestricted transfer language opens the door to a new owner who never underwent SBA eligibility screening taking over while taxpayer-guaranteed debt is outstanding.
Accurate Ownership for the 20 Percent Guarantee Rule
Anyone holding at least a 20 percent ownership interest in the LLC must personally guarantee the SBA loan. The agency has discretion to require guarantees from other individuals as well, but will not require one from anyone owning less than 5 percent.4GovInfo. 13 CFR 120.160 – Loan Conditions Because the ownership stated in the agreement controls who is on the hook, inaccurate percentages are not just a paperwork issue. The lender cannot close until the guarantor list matches the ownership record.
Veto Rights That Trigger SBA Affiliation
SBA loans are reserved for small businesses, and “affiliation” rules can combine your LLC with another company for size purposes, pushing you over the limit. Operating agreement provisions are a common trigger.
Under 13 CFR 121.103, a minority member with the power to block ordinary business decisions — hiring executives, setting compensation, approving debt, buying equipment, paying dividends — can be found to have “negative control” over the LLC. If that minority member is tied to another business, the SBA may aggregate the two companies’ sizes.5eCFR. 13 CFR 121.103 – How Does SBA Determine Affiliation
The regulation permits a minority member to block certain “extraordinary” actions without creating affiliation:
- Adding new equity stakeholders or increasing an existing stakeholder’s investment
- Dissolving the company
- Selling the company or all of its assets
- Merging with another entity
- Filing for bankruptcy
- Amending governance documents to strip the minority member’s blocking rights on the items above
The practical line: a 30 percent member who can block new debt or an equipment purchase likely creates affiliation; a 30 percent member who can block only a full sale or dissolution probably does not.5eCFR. 13 CFR 121.103 – How Does SBA Determine Affiliation A lot of well-drafted investor protection language fails this test. Review every supermajority clause and veto right before submission.
Every Member Will Be Screened for Citizenship
As of April 2026, the SBA bars foreign nationals from all SBA-guaranteed loan programs. Every owner of a small business applying for a 7(a), 504, microloan, or surety bond must be a U.S. citizen or U.S. national with a principal residence in the United States, and a business owned “in whole or in part” by a foreign national is ineligible.6U.S. Small Business Administration. SBA Bans Foreign Nationals from Accessing SBA-backed Loans
Every member listed in your operating agreement will be screened. One non-citizen member kills the application. If your LLC has international investors or non-citizen co-founders, address the ownership structure before you submit, or look at financing outside the SBA programs.
Added Requirements for Real Estate Holding LLCs
If your LLC owns real estate that a separate company operates on, the SBA treats the property-holding LLC as an “Eligible Passive Company” (EPC) and the business as the “Operating Company” (OC). Both must qualify as small, and the EPC’s operating agreement needs to accommodate the structural rules in 13 CFR 120.111.7GovInfo. 13 CFR 120.111 – Eligible Passive Companies
- A written lease between the EPC and OC, subordinate to the SBA’s lien on the property, with an assignment of all rents to the lender as collateral.
- Lease payments capped at the loan payment plus the EPC’s direct holding costs (maintenance, insurance, property taxes).
- A lease term, including renewals exercisable solely by the OC, at least as long as the loan term.
- The OC guaranteeing or co-signing the loan. For 7(a) loans that include working capital or asset purchases, the OC must be a co-borrower.
- Personal guarantees from every person holding at least 20 percent of either the EPC or the OC.7GovInfo. 13 CFR 120.111 – Eligible Passive Companies
Lenders review the lease alongside both operating agreements, and a mismatch between them can unravel the loan at closing.
Electronic Signatures Must Meet IAL2
The SBA permits electronic signatures, but not every e-signature platform qualifies. Beginning with SOP 50 10 7 (effective August 2023), electronic signatures on 7(a) and 504 loan documents must meet Identity Assurance Level 2 (IAL2) as defined by the National Institute of Standards and Technology.8U.S. Small Business Administration. Issuance of SOP 50 10 8 with Technical Updates
IAL2 means the platform verifies identity through document validation (checking a government-issued ID like a driver’s license) and then confirms the signer is the person on that ID, typically with a live selfie compared against the ID photo. This applies to application, closing, servicing, and liquidation documents. If you plan to sign and submit your operating agreement electronically, confirm your provider is IAL2-compliant before signing day.
Consistency With State Records Before You Submit
Before anyone signs, confirm every detail in the agreement matches the Certificate of Formation on file with the Texas Secretary of State: entity name, registered agent, and management structure. Inconsistencies give lenders a reason to send the package back.
Lenders also typically request a franchise tax account status certificate from the Texas Comptroller of Public Accounts. Texas no longer uses “Certificate of Good Standing” — the document is now the Certificate of Account Status, confirming the LLC has met its franchise tax filing requirements and retains the right to transact business in Texas.9Texas Comptroller of Public Accounts. Franchise Tax Account Status10Texas Secretary of State. Copies and Certificates Pull it through the Comptroller’s online search tool. Even if you fall below the $2,650,000 no-tax-due threshold and owe nothing, a missed filing can forfeit your right to do business in Texas and stop the loan process cold.11Texas Comptroller of Public Accounts. Franchise Tax
On signatures: Texas law binds members and managers to the company agreement whether they sign it or not, but the SBA will want every member’s signature as acknowledgment and consent.1State of Texas. Texas Business Organizations Code 101 – Limited Liability Companies Notarization is not required by Texas law, though some lenders prefer it.
Keep the Agreement Current After Funding
The SBA expects the ownership and management structure that qualified for the loan to remain intact through repayment. A transfer of membership interests, a change in management, or an amendment that shifts control may require the lender’s prior consent, and in some cases direct SBA approval.
The most common failure is an informal transfer: a member steps back from day-to-day operations, someone new takes over, and nobody updates the agreement or tells the lender. From the SBA’s perspective, the entity that qualified for the loan no longer exists in the form it approved, which can trigger a default review. If a change in ownership or control is coming, ask the lender before it happens, not after.