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Volume X, Number 225

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August 10, 2020

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SBA Releases Guidance to Lenders Related to Borrowers’ Changes in Ownership

The SBA recently issued a Procedural Notice for lenders on July 23. The Procedural Notice states that the 7(a) Standard Operating Procedure (“SOP”) applies to the servicing of PPP loans. The SOP states that lenders must notify the appropriate SBA Loan Center when taking substantive unilateral Loan Actions during their servicing of the loan. Per the Servicing and Liquidation Matrix, a “change in the ownership of a Borrower within the first 12 months after final distribution” requires SBA prior approval. For purposes of PPP, all PPP loans are generally considered “finally disbursed” and so, under the SOP, a change in ownership may require SBA prior approval. Change of ownership is not defined in the guidance and therefore it is important to work with your lender on what, if any approval, is necessary.

For PPP borrowers contemplating any changes in ownership, we suggest contacting your lender to discuss how the lender is handling the new guidance issued by the SBA and whether SBA regional approval should be sought prior to a change in ownership.

Please see the Procedural Notice here.

Please see the Servicing and Liquidation Matrix here.

Please see the SOP here.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume X, Number 214


About this Author

Phil Feigen of the Polsinelli Law Firm Corporate Transaction Attorney, in Washington DC
Office Managing Partner

Phil Feigen brings a unique perspective to providing general corporate advice, as well as complex business counsel to clients in ever-changing regulatory environments.  For more than 20 years, Phil has been providing guidance with respect to Small Business Investment Companies and other Small Business Administrative regulations, federal and state banking laws and federal securities laws. 

Phil focuses on helping clients through the SBIC licensing process so that they may realize the benefits of the program and increase the amount of investment...

Sara C. Ainsworth Securities & Corporate Finance Attorney Polsinelli Washington, D.C.

As an associate in the Securities & Corporate Finance practice, clients rely on Sara Ainsworth to work with Polsinelli’s team of attorneys to analyze each transaction matter to develop a strategic approach to representation based on the client’s immediate and long-term business and operational goals.

Working closely with seasoned Polsinelli attorneys in the Securities & Corporate Finance practice, Sara helps deliver a range of legal services during the life cycle of the client’s business—from selecting the appropriate choice of entity through to exit strategy.  Her practice focuses on:

  • Planning and executing capital-raising transactions
  • Drafting and negotiating key commercial agreements
  • Money service business and banking applications and registrations
  • Mergers and acquisitions and other strategic transactions
  • Fund formation, including regulated funds such as Small Business Investment Companies

Sara supports clients in a variety of industries, including the financial technology and mobility industries. Collaborating with attorneys from other related practices allows Sara and the entire attorney team to provide clients with comprehensive legal advice designed to minimize liability, maintain flexibility, and advance the client’s objectives.