SBA rule change allowing sellers to be involved longer than 1 year?

searcher profile

May 08, 2023

by a searcher from Georgia Institute of Technology in Atlanta, GA, USA

I was told by a broker today that there is new SBA guidance that will allow a seller to be involved in the business for longer than one year. It was unclear if this was related to employment, qualifying the business, consulting, etc.

Apparently the exact rules have not been implemented by lenders yet but is forthcoming, according to the broker. Can anyone validate or shed any light on this? Thank you!

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commentor profile
Reply by a lender
from California State University, Sacramento in Seattle, WA, USA
There is a congressional hearing on May 10th. The clarifications on seller roll could drop on the 10th and will surely be out on the 11th. Now they could issue just a procedural notice that discusses just the two new rules and how to implement them? But we don't know exactly what's going to be clarified until we see it. AND when the SOP does drop it will not be effective for 30 days. Our experience is that there are usually additional tidbits that will need to be understood. Each bank is also going to need time to understand the changes from the SOP AND the procedural notice and then decide how and which changes will be implemented.
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Reply by a searcher
in Highlands Ranch, CO, USA
There is a new SOP that is expected to drop this week and apparently allowing some previous owner to roll equity. It's not out yet though so it's not known how exactly it will be written and it will likely take a little time for banks to each interpret it. It may be a little while before there is consensus on what it means. A few good Twitter accounts in the space that I'm watching for info when it drops are @LisaGForrest and @EndresenHeather
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