Above $1 million, we run a test that never appears on a smaller file: the guarantors have to show net worth at least equal to the loan amount. Below that threshold the test is not run, and no personal financial statement is collected for the purpose.
That is the rule in two sentences. The rest of this page is where it lives in our program guidelines, how the threshold is worded (the document states it two slightly different ways, and we show you both rather than picking one), what the number is actually compared against, how you evidence it, when it gets switched on by loans you already have rather than the one you are applying for, and the part that costs borrowers the most time: net worth is not the reserve test. Passing one tells you nothing about the other.
The rule as written
It sits in the borrower and guarantor eligibility table, in the same column as the 650 minimum FICO, the trade line minimums, the bankruptcy and foreclosure seasoning, the OFAC screen, and the post-closing reserve line. It is a pass or fail eligibility item, not a pricing input. Nothing in the guideline says a larger net worth buys a better rate or more leverage. The guideline says the opposite about what drives those two things: interest rate and leverage are based on the guarantor with the highest middle credit score.
Two features of the wording carry weight.
First, the comparison is net worth against the loan amount. Not a multiple of the loan amount. Not your total exposure across every loan you have with us. Not liquid net worth. On a $1.4 million request, the number to clear is $1.4 million of assets over liabilities.
Second, it is written as a trigger, not a sliding scale. Under the threshold the test is off entirely. Over it, the test applies at full size. There is nothing in the text that gives a $1.05 million loan a softer version of the requirement than a $2.4 million loan gets.
The document states the threshold twice, and not identically
This is worth flagging plainly rather than smoothing over, because the two statements are not word-for-word the same and the difference lands exactly on a loan of precisely $1,000,000.
| Where it appears | How the threshold is written | What else that passage says |
|---|---|---|
| Guarantor Qualification Requirements — borrower/guarantor eligibility table | Required only for Loans > $1MM, or when total exposure to one borrower exceeds $1MM | States the substantive rule: net worth must be at least equal to the loan amount |
| Appendix B — documentation matrix | Required for loans ≥$1MM only | States the documents that satisfy it, and adds that it may also apply where a borrower or guarantor has multiple loans |
Both passages are inside the same document, effective 8/3/2026. The change log at the back of the guideline does not carry a dated entry for either line, so there is no basis in the file for calling one of them the newer wording and the other superseded. We are not going to invent one.
Practically, this only matters in a narrow band. A loan of $999,000 is under both readings. A loan of $1,000,001 is over both. A loan of exactly $1,000,000 is inside the requirement under the Appendix B wording and outside it under the eligibility table wording.
There is a simple planning move here. If your loan is going to sit within a hundred thousand dollars either side of $1 million, prepare the personal financial statement anyway. It is a document you can produce in an afternoon, and having it in the file when it turns out to be required is worth more than the hour you save by skipping it.
What the number is compared against
The requirement compares net worth to the loan amount. The trigger, though, can be pulled two different ways, and this is where people misread it.
The test switches on if either of these is true:
1. The loan you are asking for is over $1 million; or
2. Your total exposure to us across all your loans exceeds $1 million.
So a borrower requesting a $600,000 loan who already carries $700,000 with us is over the exposure trigger even though the new loan is well under the loan-size trigger. The test is on.
What the test then measures is still the loan amount. The eligibility line says net worth must be at least equal to the loan amount, and the Appendix B line says combined minimum net worth equal to the loan amount. Neither says net worth must equal total exposure. The guideline is silent on whether an underwriter reviewing a stacked position looks at aggregate exposure as a matter of judgment, and we are not going to fill that silence with a number. What we can say is what the file supports: multiple loans per borrower or guarantor are allowed, and additional due diligence may be required.
What counts toward net worth
The guideline defines net worth in its glossary as the amount by which the assets of an individual or entity exceed its liabilities. That is the whole definition.
This is important, and it is the single most useful thing on this page for anyone who has been through a reserve exercise: the program does not publish an eligible-asset schedule for net worth, and it does not publish haircuts for net worth. There is a detailed acceptable-and-unacceptable asset table in the guideline, and there is a haircut table, but both of those sit inside the reserve section and are written in terms of what can be counted as part of the borrower's reserves. The net worth line does not import them.
That means the ordinary balance sheet items that are useless to you for reserves are not, on the face of the guideline, useless to you for net worth: equity in real estate you own, equity in a closely held operating business, and similar illiquid holdings are assets that exceed liabilities in the plain meaning of the glossary definition. The personal financial statement contemplated by the guideline is explicitly described as including real estate among assets.
What the guideline does not do is promise how an underwriter will value or discount any of that. It is silent on valuation methodology for net worth. Do not read our silence as approval of an aggressive number on your own statement. Read it as: bring documentation for what you claim, and expect questions about anything large and illiquid.
The three ways to evidence it
Appendix B gives three alternatives. You do not have to produce all of them.
| Evidence | What it is | Practical notes |
|---|---|---|
| Current personal financial statements of all guarantors | A statement of each guarantor's assets and liabilities at a point in time | The most common route. The guideline calls for statements of all guarantors, not just the largest owner |
| A recent liquidity statement | A statement of the guarantor's liquid position | Named as an acceptable alternative in the matrix |
| A CPA-certified net worth statement | Net worth attested by a CPA | The route that takes the longest to obtain, and the one to start early if you expect the file to be scrutinized |
Three things about that list that are easy to miss.
The guideline says current personal financial statements and a recent liquidity statement, but it does not attach a day count to either. It does elsewhere attach a hard number to a different document — personal credit reports must be dated within 120 days of the note date — which tells you the drafters knew how to specify a window when they wanted one. They did not specify one here. So we will not tell you a personal financial statement is good for exactly ninety days or exactly six months. If yours is stale enough that your own position has moved materially since you signed it, refresh it.
The requirement is stated as a combined minimum net worth. Appendix B's language is "with a combined minimum Net Worth equal to the loan amount." That is the reading that matters for a deal with two or three guarantors: the guideline does not require each guarantor individually to clear the loan amount. It requires the combined figure to.
The matrix is not a closed list. The guideline states that the underwriter may request additional documentation, and may use alternative documents in lieu of the ones on the document matrix, where the rationale is documented in the underwriting summary. That cuts both ways — it is a route to flexibility, and it is a reason not to treat any one of the three options as a guaranteed key.
Where the thresholds sit relative to each other
Loans in this program run from $100,000 to $2,500,000, with maximum exposure across all products of $6,250,000. On a case-by-case basis loans under $100,000 are allowed. Loans exceeding $2,000,000 require senior management approval — a separate approval layer from the net worth test, applied on top of it, not instead of it.
Note where $1 million falls in that range. It is not an unusual loan size for this program. It is closer to the middle than the top. A borrower who thinks of the net worth test as something that only applies to large institutional deals is calibrating from the wrong reference point.
Net worth is not the reserve test
This is the distinction most borrowers get wrong, and getting it wrong in either direction costs money.
They are two separate requirements, tested against different numbers, satisfied by different assets, on different files.
| Net worth test | Post-closing reserves | |
|---|---|---|
| When it applies | Only above the $1MM loan-size or exposure trigger | On the loans and transaction types the reserve section specifies |
| Measured against | The loan amount | Months of the qualifying principal-and-interest payment |
| Asset type | Assets over liabilities, per the glossary definition — no published liquidity constraint | Liquid financial reserves: cash and other assets that can be easily converted to cash |
| Haircuts | None published for this test | Yes — the reserve section publishes a haircut schedule |
| Evidenced by | PFS, liquidity statement, or CPA-certified net worth | Account statements per the reserve documentation requirements |
The reserve requirement is six months of the qualifying principal-and-interest payment for the subject property, and our page on cash reserves for a commercial loan covers that number, what qualifies, and the haircuts in full. It is a separate page because it is a separate test.
The failure modes are symmetric and both are common.
Direction one: assuming net worth carries the reserve test. A borrower with $4 million of net worth, nearly all of it equity in buildings, clears the net worth test on a $1.5 million loan without effort — and can still fail reserves, because equity in real estate is not cash and cannot be easily converted to cash. The reserve section is explicit that liquid financial reserves means cash and assets easily converted to cash, and it lists specific categories that cannot be counted. Net worth of $4 million and liquid reserves of $9,000 is a real combination, and it is a decline on the reserve line while passing the net worth line comfortably.
Direction two: assuming reserves carry the net worth test. Less common, but it happens on files where the borrower has been sitting in cash after a sale. Six months of P&I on a $1.2 million loan is a modest number. It is nowhere near $1.2 million. Clearing reserves does nothing for a net worth test that is measured against the full loan amount.
One more mechanical point on the reserve side that does interact with the net worth question. Eligible assets of all borrowers and guarantors may be combined for reserves, and the guideline says they should be verified at approximately the same time to prevent double counting of funds. That combining principle runs parallel to the combined net worth language. In both cases, the guarantor group is assessed as a group — and in both cases, the same dollar cannot do two jobs.
Where borrowers actually get tripped up
A short list, drawn from the same passages above rather than from anywhere else.
Bringing in a partner to fix the net worth number, and creating a new guarantor problem. Adding an owner at 25% or more makes them a guarantor. That means a credit report, the background search, the FICO minimums, and every other eligibility line applies to them too. A partner who solves the net worth arithmetic and fails the credit or bankruptcy seasoning tests has made the file worse.
Treating the personal financial statement as a formality. It is the document the combined figure is built from, and it is the document the underwriter reconciles against credit and against the debt schedule. Inflate an asset and you have not gained a dollar of approval; you have added a condition.
Starting the CPA route late. Of the three evidence options, a CPA-certified net worth statement is the one you cannot produce yourself over a weekend. If your file is close to the line, or your assets are complex enough that a self-prepared statement will draw questions, that is the moment to call your accountant — not after the condition is issued.
Forgetting the exposure trigger. Borrowers who have financed with us before and are now adding a fourth small property are the group most likely to be surprised by this. The new loan being under $1 million does not mean the test is off.
What this page does not do
This page explains one eligibility test in our SBC program guidelines as they read effective 8/3/2026. It is not an approval, not a pre-approval, not a quote, and not a commitment to lend. Program standards are general; exceptions may be considered case-by-case with the approval of our designated credit team, and nothing here creates a right to one.
It does not tell you your net worth. It does not tell you how an underwriter will value a closely held business interest, a partial real estate interest, or any other illiquid asset on your statement — the guideline publishes no valuation methodology or haircut schedule for the net worth test, and we are not going to supply one it does not contain.
It does not cover the reserve requirement in any depth. That is a separate test with its own qualifying assets, its own haircuts and its own page.
It does not cover who has to sign a guaranty beyond the summary above, and it does not address rate, leverage, LTV, DSCR, property eligibility, or documentation program type. It does not resolve the "> $1MM" versus "≥$1MM" wording difference between the eligibility table and Appendix B; it flags it, because on a loan of exactly $1,000,000 that difference is real and only an underwriter looking at your specific file can settle it.
Tax treatment of your assets, the legal structure of your holdings, and how you should title or transfer property are questions for your accountant and your attorney, not for us.
Guideline SBC 08/03/2026 · Reviewed August 31, 2026
Published August 31, 2026 · Updated August 31, 2026
How to use this guide
This article is educational guidance, not an offer or commitment to lend. Rules, property facts, credit, leverage, documentation, and full underwriting still control any actual scenario.