I am looking at construction companies in Arizona, which has a strict 4 year time requirement for many of the specific contractors licenses. The licenses are held by the entity with the requirement that there be a qualified person on the license. When the seller is the qualified person and the buyer cannot yet qualify, the options are to (1) partner with someone who could qualify for the license, (2) ask a current employee become the qualified person, or (3) ask the seller to stay connected as the qualified person. I have been told that the SBA does not like the flight risk created by having someone who is not the owner as the qualified person. Is this true and, if so, what might be sufficient to mitigate this? Would a seller note work? Keeping the seller as a 5-10% owner, etc.
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Outside of having the seller stay on, I do not think a seller note is going to be sufficient. The only other way to do it would be to buy it with a partner (whether an existing employee or outside employee) that can hold that license. Please let me know if you have any additional questions or would like to discuss options further. You can reach me here or directly at --@----.com Have a great day!