The Small Business Administration issued a Procedural Notice effective Friday, October 2nd affecting companies that want to sell and have received Paycheck Protection Program funds but have not fully satisfied the note.
The new PPP notice essentially gives borrowers new transfer guidelines and procedures.
Suppose you plan to sell your business or buy a company with an outstanding PPP loan. In that case, you will need to notify the PPP lender of the contemplated transaction and provide the lender with a copy of any proposed agreements.
Change of ownership is defined in three ways in the notice: 1) at least 20 percent of common stock or other ownership interest of a PPP borrower is sold or otherwise transferred, 2) at least 50 percent of its assets are sold or otherwise transferred, 3) the PPP borrower is merged with or into another entity. In some instances, prior SBA approval would be required for the change of ownership. Regardless of ownership, the PPP borrower remains responsible for all obligations and compliance under the PPP loan until the PPP Note is fully satisfied.
If you received the PPP loan, are preparing to sell, and are still scratching your head, Windham Brannon is here to help. Email us