Change in the ownership & role with SBA

by a searcher

11 months ago

There is potential situation that warrants us to change the ownership and role. My partner will take on the CEO/President role and while I step aside. Her skills and personal cost of living are more aligned with what the business needs. This requires a change of ownership and change in personal guarantee.  Our lender told us that this will require Lender as well as SBA approval. 

I will become minority owner or be out completely, with money I get by selling my equity , I plan to look for another business to buy.

I am wondering if this will reflect negatively on either of us as far as future SBA loan are concerned ? 

How long I will have to wait to apply for new loan with SBA to buy another business.

1 like
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4 comments

lender from Eastern Illinois University

I think you have already gotten some good advice. I hope this is not to repetitive, but the biggest issue is going to be how your existing lender and SBA treats the situation. If they release your guarantee (which may be easier said than done), you would be qualified to buy another business right away. If the Bank does not release your guarantee, then it depends on how much buying power you still have under the $5 million SBA limit. You could still go out and buy another business stating you are no longer in control of the other business, but any new lender is going to be required to underwrite your situation globally to be sure the cash flow works. You could try to get the partner to get financing to take you out of the situation completely. Depending on the situation and cash flow, this may or may not be possible to achieve.

I would be more than happy to have a broader discussion about your specific situation and see if we can offer better guidance or assistance. You can reach me here or directly at --@----.com Good luck.

11 months ago | like reply | 0 likes

professional from The University of Alabama - Culverhouse College of Commerce and Business Administration

Agreed with the above. If the lender doesn’t want to lose your guaranty they wouldn’t have to let it go. In which case, a fresh partner buyout deal might be the answer, whether remaining partner pays anything over the existing loan amount or not.

11 months ago | like reply | 0 likes

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