i purchased a company with a SBA loan that the previous owner was the personal guareentor - could the previous owner legally sell the business

I'm not quite sure of the facts here.  Are you saying that you bought a business, and that the business owed a debt on an SBA loan and that loan was not satisfied at the time you bought the business?  Assuming that's the case, the seller can sell the business.  However, there were probably terms in the SBA loan that put the loan into default in the event of such a sale.  If the business assets were pledged as security for the SBA loan, you've taken those assets subject to the lender's lien on the assets.  You should provide all of the sales documents to an attorney who can review them and help you understand what you purchased and any legacy debts/liens that might impact your ownership and use of the business and its assets.