SBA Loan being used to purchase an established business
After the expiration of a 12 month consulting agreement, I understand the Seller of a business is not allowed to be an officer, director, stockholder or key employee of the business. My question… Is the Seller allowed to work for the business on a part-time basis?
The SBA’s Standard Operating Procedures (SOP) do expand upon the limitation of the Seller’s role in the business post-sale. My understanding of the SOP is that the Seller can be an employee of the business; however, the can not be a key employee. The SOP provides examples of “key employee” including, an employee who manages daily operations such as overseeing a department or division. It also further offers the example that a clerical staff role in the company would not be a violation.
If you have specific questions about the intended role of the Seller in the business after purchase, it would be best to clarify those directly with the SBA and/or your lender.
Hope this helps!