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On October 2, 2020, the U.S. Small Business Administration (the “SBA”) issued Procedural Notice (5000-20057), titled “
Paycheck Protection Program Loans and Changes of Ownership” (the “Notice”). The Notice sets forth the steps that must be taken when the recipient of a Paycheck Protection Program ("PPP") loan intends to engage in a transaction considered by the Notice to be a change of ownership.
Although continuing to leave some questions unanswered, the Notice provided much-needed guidance to PPP borrowers and lenders, acquirers and M&A practitioners at a critical time for M&A activity. This article provides a refresher of the Notice, as originally summarized in a Lathrop GPM legal alert on October 14, 2020 by Business Transactions Practice Group members Bill Klein and Daryn McBeth, and considerations for PPP borrowers that are considering or in the process of a change of ownership.