PPP Forgiveness

searcher profile

August 21, 2020

by a searcher from Harvard University - Harvard Business School in Chicago, IL, USA

I am looking at an acquisition where the owner received a PPP loan in April. The business has met all criteria for forgiveness. Has anyone looked at an acquisition with an existing PPP loan? If I buy all the assets can the previous owner still apply for forgiveness?

Thinking about structuring the forgiveness as a gift to the owner and 'splitting' the difference if they unable to get forgiveness.

Thanks

0
14
180
Replies
14
commentor profile
Reply by a professional
from Walsh College of Accountancy and Business Administration in Detroit, MI, USA
I agree with Zach and Alexander, there is a lack of specific guidance right now. I have worked on 2 deals that have closed with PPP loans. In both cases buyer bought LLC Units and the lender consented to the ownership change. This resulted in the Buyer assuming the PPP loan. Buyer held back purchase price equal to the PPP loan and after forgiveness is granted the Buyer will pay Seller.
commentor profile
Reply by a searcher
from Stanford University in Littleton, CO, USA
It's either debt, which you won't be assuming or it's cash, which you won't be getting. Seller's cash balance, theoretically, is higher by the value of the PPP loan than it would have been otherwise without it. His entity will remain, which is the entity that will have foregiveness or have to pay back the loan. Shouldn't affect your deal - benefit of "cash free, debt free"
commentor profile
+12 more replies.
Join the discussion