Change in the ownership & role with SBA

by a searcher

May 07,2023

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
58 views
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.

05/08/2023 | 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.

05/07/2023 | like reply | 0 likes

More on Searchfunder

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

Free Playbook to Increase Valuation & Exit Price

How to spot FAKE EBITDA, without spending a nickel on due diligence...

Investor Connecting with Self and Traditional searchers

Searchfund Investor seeking deals under LOI

Self Funded Search

Private Equity Investment Intern

Investing in Self-Funded 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.