Another grey area for the Paycheck Protection Program (PPP) is clearer after a recent procedural notice from the U.S. Small Business Administration (SBA). In the October 2, 2020 notice sent to agency employees and PPP lenders, the SBA outlined the procedures that must be followed when an entity that has received a PPP loan undergoes a change in ownership. View the procedural notice here.
This is much-needed guidance from the SBA for businesses that have been trying to expedite the PPP loan forgiveness process due to a looming change of ownership. In the notice, the SBA defines change of ownership for PPP purposes as one of three scenarios:
- At least 20% of the common stock or other ownership interest of a PPP borrower (including a publicly traded entity) is sold or otherwise transferred, whether in one or more transactions, including to an affiliate or an existing owner of the entity;
- The PPP borrower sells or otherwise transfers at least 50% of its assets (measured by fair market value), whether in one or more transactions; or
- A PPP borrower is merged with or into another entity.
Get more key takeaways from the SBA notice in this 17-minute video from RKL Partner Ryan Hurst. He outlines what obligations and responsibilities remain with the PPP borrower, what notifications must be provided to the lender, when SBA approval may be required and more.
Click below to watch the video and contact your RKL advisor with specific questions regarding your organization’s PPP loan.
Visit RKL’s Business Recovery Resource Center for more guidance and insights, including our PPP Forgiveness Knowns & Unknowns post.