Final answer:
Owners of 20% or more of equity in a business are required to personally guarantee an SBA loan. A federal interest rate ceiling of 20% on all loans would benefit borrowers by capping interest rates, while it could potentially harm lenders by limiting the interest they can charge.
Step-by-step explanation:
All owners of 20% or more are required to personally guarantee an SBA loan. If the government imposed a federal interest rate ceiling of 20% on all loans, the parties who would generally gain are borrowers, as they would be protected from exorbitant interest rates. On the other hand, lenders could lose out because they may be unable to charge higher rates that they deem necessary to offset the risks associated with lending, especially in high-risk scenarios. In the case of an SBA loan, all owners of 20% or more are required to personally guarantee the loan. This means that if the loan is not repaid, these owners will be held personally liable for the outstanding debt. For example, if a business owner owns 25% of the company and the company takes out an SBA loan, that owner would be required to personally guarantee the loan.