SBA eligible under new rules? Scenarios.
September 26, 2023
by a searcher from University of Southern California in Orange County, CA, USA
Would the following scenarios be eligible under updated SBA rules?
Scenario #1
- Asset transaction
- Seller rolls equity for 15% ownership of NewCo
- Seller signs personal guarantee
Scenario #2
- Stock transaction
- Seller maintains 15% ownership
- Seller does not sign personal guarantee
from University of North Carolina at Wilmington in Wilmington, NC, USA
The SOP currently reads "“The small business is redeeming a partial ownership interest from one or more owners. All remaining owners are subject to the requirements for guaranties in Section A, Ch. 5, Para. A; however, the percentages of ownership for this requirement will be based on the post-sale percentage of ownership in the business."
BUT a technical update given over industry association calls says the following "“Will delete provision that allowed personal guaranties to be based on post-sale ownership percentages and to clarify that existing guaranty requirements apply [this means that full personal guaranties will be required from any owners that held 20% or more ownership 6 months prior to the sales transaction]“
Until the SOP is updated we can rely on it for guidance on how to interpret post close gty requirements. ^redacted and I have office hours each Wednesday. We discuss in detail the changes to the SOP, structure and eligibility. Reach out if interested! redacted
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA