SBA part 3: bringing on partner >20% after SBA loan

searcher profile

February 08, 2022

by a searcher from University of Colorado at Boulder in Los Angeles, CA, USA

Hello Searchfunders: If I had a company that received SBA 7a loan last August, and, fast forward to today, I was contemplating buying another division for equity and keeping that owner as a 30% partner, what restrictions would I be under? Do I need to ask consent? How is this typically handled? The new division would not be using the assets that were bought with SBA money so would not want to require the incoming partner to g’tee the loan or have any recourse. All thoughts welcome! Thank you in advance.

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commentor profile
Reply by a lender
from University of Missouri in St. Louis, MO, USA
I would have to see if this is still in the SOP, but changes in ownership in the first year I believe requires direct SBA approval. I would think not telling your lender would be a mistake.You might not get your wrist slapped, but anyone doing any level of post close maintenance would see this.If you are buying a separate entity then just keep them legally separate.Then you are in compliance still.
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Reply by an intermediary
from Miami University of Ohio in Chicago, IL, USA
Take it from an old lender.If you mention this to them they will require a personal guaranty from the 20% or greater owner.With that said if you are never going to need to restructure or increase debt etc with the SBA loan then the SBA will never know.But if for some reason you need to restructure or do another SBA loan it will be dug up and they will figure it out and require a guaranty.
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