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.