Do all minority owners need to fully exit business in 12 months for SBA 7a?

searcher profile

November 30, 2021

by a searcher from Iowa State University of Science and Technology in Overland Park, KS, USA

I have a deal with one majority owner, at 60%, and two minority owners, each at 20%. Do all three owners need to exit the business per SBA 7a rules within 12 months? With only 12 employees, the two minority owners are critical to not only transitioning the business, but will leave a substantial hole organizationally. They would like to stay on for 3-5 years before retiring themselves.

0
1
47
Replies
1
commentor profile
Reply by a searcher
from Harvard University in Dallas, TX, USA
There was a recent post on this by devin byrne, titled "Owner/Seller remaining with the business beyond 12-months" One way around this is to have them role, some small portion of equity which is now allowed under the new SBA rules. They will likely want to stay under 20% each as that would invoke a PG requirement from them.
Join the discussion