Please note that this alert updates prior publications made by our firm pertaining to the subject matter discussed below.

The SBA recently released a procedural notice for borrowers under the Paycheck Protection Program (PPP) seeking to enter into one or more transactions that will result in a change of ownership. 

The procedural notice defines what constitutes a “change of ownership” and, in the event that a transaction will result in a change of ownership, (a) when SBA approval will be required, and what documentation the SBA will require, and (b) what actions the PPP borrower may take to avoid the necessity of obtaining such SBA approval.   In any case, prior to closing a transaction involving a change of ownership, a PPP borrower must notify its PPP lender in writing of the proposed transaction and provide the PPP lender with a copy of the proposed agreement or other document that would effectuate the proposed transaction. 

The procedural notice also states that there are no restrictions on change of ownership if, prior to closing the sale or transfer, the PPP borrower has (a) repaid the PPP loan in full, or (b) completed the loan forgiveness process.