SBA PPP Loan Update: When Buying And Selling Small Businesses


Bill Ziprick PPP Loan Update

On Friday, October 2, 2020, the SBA issued an "SBA Procedural Notice" ("Notice") on "Paycheck Protection Program ("PPP") Loans and Changes of Ownership", a very critical topic for so many sale transactions which are presently in the pipeline, or are being contemplated. Importantly, "Change of Ownership" is defined as occurring when 20% of more of stock/ownership interest in an entity is to be transferred, or at least 50% of the assets are to be transferred - so the application of the Notice is very broad.

The Notice then describes various SBA requirements which must be met for various factual situations, including when the PPP Note is fully satisfied, or, in contrast, when the PPP Note will not be fully satisfied prior to closing the sale or transfer. From a review of the Notice, it is clear that by far and away the cleanest scenario is to have the forgiveness of the PPP loan having fully occurred prior to closing, with the underlying Lender having been fully paid off by the SBA, or in combination with the PPP borrower. This fact emphasizes the importance of a potential Seller having its forgiveness application being submitted and processed as quickly as possible.

The requirements in the Notice for situations when the PPP Note will not be fully satisfied at closing can be difficult to satisfy and potentially time consuming. For example, one alternative requires that the full amount of the outstanding PPP loan balance be placed into escrow - a not very attractive option.

In summary, early planning should be essential for any potential sale transaction which involves PPP loans, and the transaction documents certainly should address the PPP loan. And as the Notice states, "SBA reserves all rights and remedies available under the law in the event of fraud, false statements, and/or unauthorized uses of PPP loan proceeds."

Categories: BizBen Blog Contributor, Business Purchase Financing, Buying A Business, Deal And Escrow Issues, How To Buy A Business, How To Sell A Business, Selling A Business, Small Business Financing

Contributor:

Willliam Ziprick
Areas Served: LA, Orange Counties
Phone:  909-255-8353 Office, 509-951-7230 Cell
Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.






  Helpful Resources To Assist In Selling And Buying California Businesses
Diane Boudreau-Tschetter: Escrow & Bulk Sale Services In California

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

Helen Yoo at New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Shalonda Chappel: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Elizabeth McGovern: Escrow Services - San Francisco Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Brad Steinberg, Business Broker: Laundromat Specialist

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

William F. Ziprick, Attorney: Legal Services For Buyers And Sellers

Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Unreported Income Cash Claims By The Seller-What Should A Business Buyer Do?

One of the most difficult challenges when purchasing a California small business is expressed by a prospective buyer of a liquor store who is told by the owner/seller that there is more money being made than shows up on the books. Should this buyer accept that statement and go ahead with the deal?

Financing A Business Purchase With Limited Or No Real Estate Collateral

In my experience working with the "right banks and financial institutions" repayment ability sometimes overrules collateral pledged by someone needing financing for a business purchase or a down payment. Peter Siegel, MBA (Business Purchase Financing Expert) at 925-785-3118 shares his experience.

Tips For Faster SBA Loan Approvals For California Small Business Purchases

In this article on BizBen, business purchase financing advisor and SBA loan broker, consultant Peter Siegel (Business Purchase Financing Expert/Advisor & the ProBuy Program Director at BizBen) at 925-785-3118 shares his views of getting SBA loan financing faster for business purchase financing.

Pricing A Small Business For Sale - Several Factors Play A Valuation Role!

As an Advisor On BizBen I talk to many California business owners, business buyers, brokers, and agents on a daily basis about valuing California small to mid-sized businesses. Many key factors go into this analysis including market demand, history of earnings, and even how the deal is structured.

Brokers Not Returning Calls About Listings: How Do I Get Them To Call Back?

There can be many reasons why Brokers take awhile to get back to potential Buyer & to other Brokers and Agents if they are cooperating on the listing. Broker's reasons include: unprofessionalism, too busy, the listing is no longer available, the buyer doesn't sound viable, etc. We discuss them all.

Valuing A Business - Do You Add The Inventory Amount To The Price Or Not?

A business buyer asks how to handle the inventory amount in the purchase price of a business. Do you add the inventory value to the business value? Peter Siegel, MBA (ProBuy & ProSell Program Advisor - Lead Facilitator ) answers this question with the BizBen Network of advisors and resources.

Buyer Beware: Does A Company's Culture Effect The Sale Of A Small Business?

When purchasing a small to mid-sized CA business, there are a many items to evaluate. One area that is often overlooked is the business's office culture. Peter Siegel, MBA with BizBen discusses with business buyers the importance of understanding how the business "feels" on a day-to-day basis.

5 Myths About Selling A California Business: Best Tips For Sellers & Brokers

Peter Siegel, MBA (at 925-785-3118) - BizBen Director discusses myths associated with the process of selling a business and some of them can actually cause deals to fall through. Don't let your sale be comprised, be aware of these common misconceptions related to the process of selling a business.


Escrow Services Diane Boudreau-Tschetter
Golden State Laundry System Laundry Business Brokers
Brian Loring Business Brokerage Specialty
Larry Larsen Laundromat Broker
Facebook
Twitter
Linkedin
Vlogs and Podcasts
California Educational Events Buying And Selling Businesses
BizBen Blogs And Articles
Business For Sale California Stats
Advertise On BizBen
Instant Email Alerts On BizBen

BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 Dublin, CA 94568 © 1994 - 2021, All Rights Reserved


New Info Daily:   Facebook   Twitter   Linkedin   Vlogs and Podcasts



500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Absentee Run Small Businesses - Is That Really A Possibility For Buyers?...
Read More News
4 Reasons Why Business Brokers Do Not Cooperate With Other Brokers & Age...
Read More News