Change of ownership with SBA lender

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by a searcher
in Illinois, USA

2yrs ago

Change of ownership with SBA lender

How to handle a change of ownership stake in the. business when SBA loan is involved ?

scenario 1 : with in first 12 months of acquisition of business
Scenario 2 : after 12 months of acquisition of business

We are inviting a senior member to join leadership role , she likes to have equity plus a management salary. We would like to put a proposal for the bank to review. As I understand Bank or sba dont entertain changing ownerships with in 12 months.

What if bank refuses to allow change of ownership at all. ? We may not be ready to refinance and incur unnecessary cost ( sba fee, legals etc for no reason).
Is there a creative way to address this.

We don't want to let go of this talent,.

Thank you in advance.

1 Like

89 Views

reply by a searcher 2yrs ago
in Rindge, NH 03461, USA

In the short term, I suggest you bring this person on and give them profit sharing instead of equity. Let them prove themselves, then deal with conversion to equity at a later date.

reply by a searcher 2yrs ago
in Rindge, NH 03461, USA

Brad, if a partial owner, say 19% of equity wants to sell their shares, I assume they can do this without SBA approval. Is that correct? Or if they transfer their share ownership into a trust for estate planning purposes? What specifically triggers SBA approval? OR is it somehow 'restricted' to transfer/sell equity shares of a business that has and SBA loan?