New SBA Changes to go into Effect October 1, 2009

We’ve been following the changes that the Small Business Association (SBA) has made to its SOP and have written about them here and here. The changes have resulted in businesses having difficulty securing funding, especially funding to put toward a business acquisition, so the SBA agreed to review its changes and decided to put amended changes into effect on October 1, 2009. 

 One of the major amendments has to do with the policies that affect the financing of goodwill. The SBA’s changes that were announced in March said that only 50% of a 7(a) loan could go toward financing goodwill, and that 50% could not exceed $250,000. The recent amendments say that if the value of a business’s goodwill is less than $500,000, 100% of a loan can go toward financing it, with no restriction. If the amount of goodwill exceeds $500,000, a lender may still finance 100% of goodwill as long as the purchaser agrees to put at least 25% of the purchase value into the transaction as equity. A full list of the SBA’s SOP can be downloaded and viewed here.

 Although these changes may make securing loans easier, it is still important that any business that will be involved in a transaction be properly valued.

 By: Present Value

Tags: SBA Changes, SBA SOP changes, SOP Policy changes 2009
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