The SBA Update came out today with some changes. Most of this update offered clarifications related to what was in the previous update that came out in August of###-###-#### I am still digesting all of the changes and will come back with a more comprehensive summary of the changes in the next few days, but I wanted to get an update out of some of the major changes that I feel directly impacts this community specifically.

1) If you do a partial business acquisition, the SBA has clarified that they will determine whether a seller needs to guarantee a loan or not based on their post acquisition ownership interest. So long as the seller owns less than 20% of the company post sale, even if they owned more than 20% of the company prior to the sale, the SBA has confirmed they will not be required to guarantee the loan. This is a big change because there was some concern this provision could go away, which would have largely killed the benefit of a partial business acquisition.

2) The SBA added language that allows for the substitution of a personal and/or corporate guarantee. In essence they are allowing third party individuals or entities to assume the liability of a personal or corporate guarantee. The substitute guarantor must offer a similar or greater value. I will try to get additional details on this new provision to share shortly.

3) The SBA in the August update had gotten rid of the ability to do a 25 year term loan for both business and real estate debt if the real estate debt was 51% or more of the total transaction. The ability to use the 25-year term is now back in effect so long as the real estate is 51% or more of the transaction amount.

4) The maximum SBA 7A loan for a business acquisition is capped at the business valuation amount. However, if the business valuation is lower than the sales agreement, the shortfall may be financed with a non-guaranteed loan so long as it is subordinate to the SBA 7(a) loan.

I think these are the major changes impacting this community that I have identified at this point. Again, once I complete a more comprehensive review I will certainly provide more feedback. Good luck to you all in your searches.