CARES Act - Does Search Fund ownership preclude eligibility?

by an investor from Harvard University - Harvard Business School

4 years ago

Hope everyone is staying safe and healthy. I'm curious to get a read on whether the broader community believes that search fund companies are eligible for the forgivable loans. There appears to be an attempt to exclude PE-backed companies (link below):
https://www.axios.com/newsletters/axios-pro-rata-f080d6bb-1717-4c56-98a0-77f94bd16347.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosprorata&stream=top

4 likes
179 views
4 comments

searcher from University of California, Berkeley - Haas School of Business

At a glance, I do not see guidance on borrower's ownership structure but here it is:

https://www.sbia.org/wp-content/uploads/2020/03/SBIA-Summary-of-Final-CARES-Act###-###-#### final.pdf

4 years ago | like reply | 1 like

searcher from University of California, Berkeley - Haas School of Business

Keep in mind there is a distinction between PE sponsor vis-à-vis SF. Your SF capital structure maybe quite different than a PE fund (GP/LP structure). SBA normally does have majority owner test for eligibility and PG. I have not read through PC's link or the new guidance that just came out via SBIA.org on CARES Act stimulus to small businesses. I encourage you to consider your own cap structure. An SBA loan officer can save you lots of time.

4 years ago | like reply | 2 likes

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Examples of self-funded searcher websites

Investor seeking Self-Funded Search Deals

What are market terms for Seller Notes?

2 Best Ways To Find Motivated Sellers, Off-Market Deals

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.