SBA Part Twenty-Eight: SBA Issues New Rules On "Change Of Ownership" Definition

On Oct. 2, 2020, the Small Business Administration (SBA) issued a Procedural Notice changing the rules regarding when and how the SBA defines a "change of ownership" event. This notice provides information concerning required procedures for changes of ownership of an entity that received Paycheck Protection Program (PPP) funds.

New "Change of Ownership" Definition

A "change of ownership" takes place when:

• "At least 20% of the common stock or other ownership interest of a PPP borrower (including a publicly traded entity) is sold or otherwise transferred, whether in one or more transactions, including to an affiliate or an existing owner of the entity,
• The PPP borrower sells or otherwise transfers at least 50% of its assets (measured by fair market value), whether in one or more transactions, or