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Robert E. Dauer Jr. and Maxwell Briskman Stanfield Courtesy Photo Robert E. Dauer Jr. and Maxwell Briskman Stanfield Courtesy Photo

While Paycheck Protection Program created by 2020’s CARES Act provided much-needed support and assistance for the operations of businesses amid the COVID-19 pandemic, it inadvertently became a stumbling block for those looking to buy or sell a business.

While the program continues to change, when it comes to transactions, the Small Business Administration’s Procedural Notice No. 5000-20057 is the latest guidance outlining rules PPP loan lenders and borrowers must follow when a borrower is contemplating a change of control transaction, merger or acquisition. Whether buyer or seller, the parties to any such business transaction will need to weigh and consider all of the effects the transaction will have on a borrower’s eligibility under the terms of the loan. In the course of overcoming this hurdle during the transaction, there are important risk allocation considerations to consider when a PPP loan is already outstanding and the transaction is in process.

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