Change in the ownership & role with SBA

May 07, 2023

by a searcher in San Francisco, CA, USA

There is potential situation that warrants us to change the ownership and role. My partner will take on the CEO/President role and while I step aside. Her skills and personal cost of living are more aligned with what the business needs. This requires a change of ownership and change in personal guarantee. Our lender told us that this will require Lender as well as SBA approval.

I will become minority owner or be out completely, with money I get by selling my equity , I plan to look for another business to buy.

I am wondering if this will reflect negatively on either of us as far as future SBA loan are concerned ?

How long I will have to wait to apply for new loan with SBA to buy another business.

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I think you have already gotten some good advice. I hope this is not to repetitive, but the biggest issue is going to be how your existing lender and SBA treats the situation. If they release your guarantee (which may be easier said than done), you would be qualified to buy another business right away. If the Bank does not release your guarantee, then it depends on how much buying power you still have under the $5 million SBA limit. You could still go out and buy another business stating you are no longer in control of the other business, but any new lender is going to be required to underwrite your situation globally to be sure the cash flow works. You could try to get the partner to get financing to take you out of the situation completely. Depending on the situation and cash flow, this may or may not be possible to achieve.

I would be more than happy to have a broader discussion about your specific situation and see if we can offer better guidance or assistance. You can reach me here or directly at redacted Good luck.

Reply by a lender
from University of North Carolina at Wilmington in Wilmington, NC, USA

Hey! Reach out to ^redacted‌ or myself to discuss in detail. We'd be happy to chat through the specifics with you. Is the plan to refinance the existing 7a loan or will the partner be paying cash to buy you out? In short, if the SBA approves the removal of your gty and ownership they won't look at you negatively if you desire to buy another business. Once the approval has gone through you can apply for a new loan immediately.

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