Sba Stock Purchase Agreement
A stock purchase agreement, commonly referred to as an SPA, is a legal document that outlines the terms and conditions of a stock purchase transaction. It is used when one party, the buyer, acquires the shares of a company`s stock from another party, the seller, either in full or in part.
The Small Business Administration, or SBA, is a US government agency that provides support and resources to small businesses and entrepreneurs. One of the services offered by the SBA is to guarantee loans to small businesses, which can help them obtain financing to start or grow their businesses.
If you are looking to purchase the stock of a small business that has an SBA loan, it is important to understand the implications of the SBA guarantee on the stock purchase agreement. The SBA guarantee provides protection to the lender in case the borrower defaults on the loan. However, it also imposes certain restrictions on the sale of the business or its assets.
Before entering into a stock purchase agreement for a small business with an SBA loan, you should review the loan documents and consult with an attorney experienced in SBA transactions. This will help you understand any restrictions or requirements that may affect the transaction.
Some of the key considerations when drafting an SPA for a small business with an SBA loan include:
- SBA approval: The SBA may need to approve the sale of the business or its assets before the transaction can proceed. This can take time and may require additional documentation or information.
- SBA loan repayment: The SPA should specify how the SBA loan will be repaid from the proceeds of the stock sale. This may involve paying off the loan in full or continuing to make payments on the loan.
- SBA lien release: The SPA should also address how any liens or security interests held by the SBA on the business or its assets will be released or satisfied.
- SBA consent rights: The SBA may have consent rights over certain aspects of the transaction, such as the transfer of the borrower`s ownership interest in the business. These rights should be addressed in the SPA.
- SBA indemnification: The SPA should include provisions for indemnification of the buyer and seller in case of any breaches of the SBA loan documents or any losses resulting from the SBA guarantee.
A well-drafted stock purchase agreement can help ensure a smooth transaction for the purchase of a small business with an SBA loan. Working with an attorney experienced in SBA transactions is highly recommended to help navigate the complex legal and regulatory landscape.