Seeking perspective/experiences with SBA General Program (GP) approval

September 13, 2024

by a searcher from Harvard University - Harvard Business School in Colorado Springs, CO, USA

We are under LOI for a partial buyout of a healthcare company, but due to license requirements will be doing this through a Managed Service Organization (MSO) structure.

The current SBA rules only allow for a seller to retain ownership in a stock transaction. Given the license requirements and the way the MSO structure works, our transaction needs to be an asset purchase. My understanding is this will require GP approval from the SBA which injects a lot of uncertainty into the deal.

Has anyone had recent experience with this? I would greatly appreciate any and all perspective - if approved, how long did it take? If denied, why? I am trying to gauge the risk of spending diligence and legal fees and ultimately have the application denied.

Thanks in advance,
Justin

Reply by a professional
from The University of Alabama in Birmingham, AL, USA

General Processing with SBA follows the exact same rules. In years past, the processing centers were constantly backed up. We also used to submit ~500 page paper packages which didn’t help timing. Lenders that receive PLP status are given the authority to approve the loans in house, which is faster. In today’s landscape with all things equal a GP loan might take 5 business days to get approved while a PLP loan takes 1 or 2. That is ONLY the actual review and approval. It doesn’t affect the rest of the process at all. There are times the centers get backlogged which can add time and those times are where PLP helps. If you have a loan structured correctly it really doesn’t matter. While you’re waiting on GP you start getting the loan closed.

As for your project, a partial buyout won’t work with an asset purchase. GP or PLP.

Reply by a lender
from University of Missouri in Denver, CO, USA

Agreed with Zachary. I used to submit all my applications GP and it is all dependent on who you get at SBA and how backlogged they are. Most times depending on deal size it may only add a week or two. If they are really backed up I think it could add significant more time, but to Zachary's point if it isn't allowed through PLP the structure likely wouldn't make it through GP.

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