We're in discussions to acquire a pandemic-impacted company that has an EIDL loan of ~$175k in place. Instead of doing an asset purchase, we're considering a stock acquisition in the hopes of being able to keep the EIDL loan given its favorable terms. Reading through the EIDL paperwork, any merger, consolidation, etc. has to be pre-approved by the SBA in order to keep the loan in good standing. Has anyone gone through this process?
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1. Pretty unlikely the SBA will allow this if you're not currently an existing owner buying out another owner. (20% ownership transfer I believe is the trigger?) If you're buying 100% then I would expect the SBA to not allow this to stay in place
2. This is a pretty risky move to save a few dollars on interest. Not sure the size of the acquisition here, but no matter the size a stock sale is a lot more risk and should be avoided if at all possible unless you're very comfortable with the seller and have done sufficient due diligence. Not to say it should never be done... but to save what would most likely equate out to ~$10k a year max in principal + interest payments on $1M+ transaction and open yourself up to any wrong doing of the previous owner is risky.