Mitigating forgiven PPP loan risk

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by an intermediary
in Nashville, TN, USA

3yrs ago

Mitigating forgiven PPP loan risk

I have been working on a few transactions in the staffing industry and have noticed a trend - owners keeping 90%+ of forgiven PPP funds in the form of distributions or balance sheet cash through a cash free, debt free structure. What are the best ways to mitigate risk, specifically that tied to an audit by the SBA / IRS? Are there ways to include a personal guarantee within the purchase agreement, etc? The challenge with holdbacks is that sellers are averse to them and then audit window is typically much longer than the holdback period. Thanks in advance for any insight around this!

2 Likes

209 Views

reply by a searcher 3yrs ago
from University of Notre Dame in Austin, TX, USA

Agree with Brad. If forgiven, it should show up clearly in other income. As a one time windfall, it should not be used to calculate any TTM EBITDA for valuation or debt service coverage purposes.

We dealt a lot with PPP, and in my experience most companies got either too much (i.e. it was inevitably more cash in owner's pocket) or not enough (it floated OpEx for a few months but they still had problems).

I think the ERC is far more likely to be subject to an IRS audit than PPP, which was pretty straightforward.

reply by an intermediary 3yrs ago
in Nashville, TN, USA

Thanks, all. Want point of clarity I should have mentioned off the bat is that the transaction will be structured as a stock deal to simplify the transition of hundreds of customer agreements. Any additional advice tied to this dynamic?