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PPP Loan Hurting Your Business Sale?

I Want To Sell But Have A PPP Loan 

If your business has a PPP loan and you are selling all or part of the business, you may need approval from the SBA or the bank that handled your loan. You may also need to put the amount of any unforgiven portion into escrow at close. 

Responsibility After Close

According to the SBA Procedure Notice 2000-20057 dated October 2020, the PPP borrower remains responsible for all obligations of the PPP loan after close.  That includes obtaining, preparing and retaining all PPP forms and supporting material and providing those forms to the PPP lender that is servicing the loan.

Notification Requirements

Prior to closing or any change of ownership, the PPP borrower must notify the PPP lender in writing of the transaction and provide the lender with all proposed agreements affecting the transaction including the Purchase Agreement.

No Restrictions On Change of Ownership IF

  • The PPP loan is repaid in full
  • The loan forgiveness application is processed and the SBA has provided full satisfaction of the loan
  • The loan forgiveness application is processed and the PPP borrower has repaid any remaining balance on the PPP loan

Prior SBA Approval of Sale Not Required IF

  1. In a Common Stock Sale or Merger:
    1. The sale is 50% or less of the common stock or other ownership interest of the PPP borrower OR
    2. The PPP borrower completes and submits forgiveness application reflecting use of all PPP funds with required documentation to the PPP lender, and the lender sets up an interest-bearing escrow account with funds equal to the outstanding balance of the PPP loan plus interest.
    3. The former borrower and in some instances, the successor to the PPP borrower will remain obligated under the PPP loan.
    4. PPP loan funds and expenses may not be co-mingled after a merger or sale if the buyer also has a PPP loan.
    5. The PPP Lender needs to notify the SBA within 5 business days of the transaction close.
  2. In an Asset Sale:
    1. A PPP borrower may sell 50% or more of its assets only if the PPP borrower completes and submits forgiveness application reflecting its use of all of the PPP loan proceeds with supporting documentation to the PPP lender AND
    2. The PPP lender establishes an interest-bearing escrow account controlled by the PPP Lender with funds equal to the outstanding balance of the PPP loan.
    3. The former borrower and in some instances, the successor to the PPP borrower will remain obligated under the PPP loan.
    4. The PPP Lender needs to notify the SBA within 5 business days of the transaction close.

This blog post does not include all of the stipulations and procedures for handling a transaction with a PPP Loan.  For More Details of the Procedure and Information regarding the sale of a business with an outstanding PPP loan visit SBA.gov.






                             

 

Lauren Altschuler
Lauren Altschuler
I assist buyers and sellers of privately held businesses in the buying and selling process. We help value your business for the best price, advertise it confidentially to qualified buyers, handle buyer interviews, discussions, negotiations and facilitate the due diligence investigation and the sale of the business.

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PPP Loan Hurting Your Business Sale?

I Want To Sell But Have A PPP Loan  If your business has a PPP loan and you are selling all or part of the business, you may need approval from the SBA or the bank that handled your loan. You may also need to put the amount of any unforgiven portion into escrow at close. 

Is Buying A Business A Good Idea?

Yes!  Buying a business is a good idea.  Why?

Ten Steps To Selling Your Business

Our Sellers except us to achieve the highest and best offer for their business while taking the least amount of their time away from it as possible. That is because the absolute best use of their time is to continue to run and grow the company.  If revenue or profits begin to decline, buyers will walk away or decrease their offer. Transworld's philosophy can be summed up in a ten step, how-to strategy that culminates with the sale of a company. This proven method has been used to sell hundreds of businesses.  Here are the steps. Step1 Comprehensive Business Analysis and Feedback As your business broker, the first thing in our how-to strategy is to analyze your operation, finances, market potential and industry trends. We take that information and advise you on steps to prepare your business for sale, and  generate a business profile that represents your company in the most attractive way possible. Step2 Sale Structure We identify the best possible price range to sell your company. This is based on solid facts, the condition of the market, projected growth, sales potential and the sale of similar businesses within your industry. Transworld’s experts apply sophisticated, time-proven valuation techniques to ensure that your price is appropriate for the current market condition. The price must not be too high or too low. Yet, it must represent an attractive investment potential for the buyer. Step3 Confidentially Network The Business For Sale During the selling process, we utilize the latest technology to present your company to other business brokers and strategic buyers all over the world. This greatly multiplies the effort in your favor. With Transworld Business Advisors, you have literally thousands of industry professionals confidentially representing your company to buyers.   Step4 Confidentially Advertise To Buyers Our aggressive marketing program ensures your confidentiality and provides maximum exposure for your company. Your listing is placed in various industry databases, Internet sites, and publications which are constantly updated. We spend more money in advertising and marketing for buyers than anyone else in our industry. Step5 Control The Information Flow We organize all necessary documentation and release information only as needed. We use limited information when advertising to maintain confidentiality. Buyers are pre-qualified and required to execute a confidentiality agreement before receiving any sensitive business information. Step6 Create Competition For Your Company We attract thousands of buyers, creating competition for your business. Buyers are qualified for financial ability to meet the offer, and we engage you with only the most qualified buyers. Once you meet the best of the buyers, we urge them to prepare and present all offers. We can continue to engage potential buyers on your behalf as negotiation on an offer is in process and have another interested party ready to go should a buyer change their mind. Step7 We Negotiate For You To Achieve The Best Price Appropriate negotiation is crucial to achieving your best price and terms. We have the expertise to establish sound and resourceful negotiating techniques on your behalf. Transworld has trained all of its agents in the art of negotiating through curriculum that we have created specifically for our industry. Never negotiate without planning, expertise, or from a position of weakness. Step8 We Provide Exceptional Support To You Through The Due Diligence Process We take pride in our exceptional service. Only half of the job is finding the right buyer who will pay your price and meet your terms. The other half is getting that buyer to the closing table. We quarterback the deal, work with the accountants, lawyers, banks, landlords, and other third parties that could jeopardize the success of the transaction. We realize that you depend on us to guide you through the sale of your business. We make the transition simple and easy for you. We know when an opportunity for you may arise and are always there to take advantage of it. We also know when someone is trying to kill your deal or is being unreasonable and how to handle those situations. Step9 We Are There From Beginning To The Closing We help manage all administrative procedures, licenses, inventory counts and lease assignments that may be required. Transworld works closely with your advisors to ensure a smooth transition. Using the latest technology, we strive to be ready to work on your behalf to get the deal done! Step10 We Are There For The Transitional Phase And Beyond! Because we are in the business community, you may want to consult us from time to time after the sale. We will provide you with the assistance after closing. Transworld will always remain in your corner! Schedule Consultation Now

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