Effective last month, the SBA amended restrictions on borrowers using 7(a) loan proceeds to effect partial changes of ownership to assist small businesses and to expand pathways to ownership. This means that SBA will no longer require a 100% change of ownership when a borrower is obtaining financing with an SBA-guaranteed loan.
This amendment to the SBA Loan program will permit borrowers to use SBA Loan proceeds to purchase a portion of a business or a portion of another owner’s interest in a business or interests of multiple business owners.
This change will result in more flexible succession planning options for current business owners.
Also, for partial changes of ownership, the SBA will allow the selling owner to remain as an owner and involved in the day-to-day business, including as an officer, director, “Key Employee,” or employee.
We will be learning more about these changes and all the different ways they can be applied in the coming months. If you want more information about how these rule changes may affect you in your particular situation, please feel free to reach out to me.
There are other changes being made to SBA lending rules this summer….some of which are still under consideration while lenders are allowed to review and comment on them before final revisions are determined. Additional information will be provided in future articles…so stay tuned.
As the Loans4Biz Program Manager for the CBI Team, I assist borrowers to obtain loans for business acquisitions.
The Loans4Biz program saves borrowers time and money by offering the following benefits on most deals:
– Assistance with gathering and completion of documents required by most lenders
– Initial communication with lenders managed by the Loans4Biz program manager
– Much better chance of finding a lender who is interested in providing a loan
– A number of financing options presented for consideration
– Getting to the closing table more quickly
Although the Loans4Biz program was created to assist buyers of businesses listed by CBI, the benefits of using the Loans4Biz program are available to anyone who needs assistance with financing a business acquisition…whether or not you are buying a business listed by CBI.
To learn more about the Loans4Biz program, contact Kelly Tivis @ 877-582-5200 or kelly.tivis@cbiteam.com
