As noted below, not all changes to the SBA property require SBA approval. However, the guidelines also provide that “the PPP borrower informs the PPP lender in writing of the proposed transaction and must provide the P3 lender with a copy of the proposed agreements or other documents that would be eddle for the purpose of the proposed transaction.” While it is likely that the PPP loan documentation of most PPP borrowers will require notification and agreement from the PPP lender for control changes, significant naum sales and mergers, it is probably not necessary that credit documentation for ownership changes, which are as small as 20%, do not receive SPP loans. For many participants in the program, the fact that the SBA has finally issued a procedural communication to all SBA employees and PPP lenders on the issue of approving the AM transactions that the market has faced in recent months is greatly facilitated. In an email to lenders, SB indicated that they were receiving notification letters inviting borrowers to complete the corresponding questionnaire. After receiving the questionnaire from the lender that insures its PPP loan, borrowers receive 10 business days to return the completed form and have requested supporting documents from the lender. It is not certain that there will be some flexibility within the allotted time. To this end, the SBA issued on October 2, 2020 the SBA (5000-20057) (communication) procedure communication, which sets out the rules that PPP lenders and borrowers must comply with when a PPP borrower contemplates a change of control, merger or buyback. At the beginning, the communication defines a “change of ownership” in which (a “change of ownership”) is published a guide in which the Small Business Administration (SBA) has issued guidelines on when the SBA agreement must be obtained before a PPP borrower is experiencing a change of ownership. It not only covers changes in the control of equity and certain asset sales, but it could also apply to withdrawals of existing minority owners by PPP borrowers and acquisitions of minority owners by other existing owners. There is the potential for significant delays and disruptions in deal structures. The new guidelines may also require the inclusion of binding trade conditions in partnership and credit agreements and should be of particular interest to the P3 lending objectives of AM. The impact of the guidelines must be taken into account well before the transaction is deed of intent. Here are some important points of the guidelines: first, PPP loans are included in the “small business administration” (the “SBA”) “7 (a) loans” and are therefore subject to the same regulatory guidelines as those applicable to loans 7 (a) in general.
These guidelines include situations in which a lender must obtain SBA authorization before a borrower can perform or authorize certain activities. Such an activity allows a borrower to “change ownership” (without indicating thresholds) within 12 months of the final payment of a loan of 7 (a), including PPP loans. It became clear that due to the volume of PPP borrowers conducting “change of ownership” transactions, SBA was required to provide PPP lenders and borrowers with additional guidance on when lenders and/or the SBA agreement would be required, if any.
