If you’re trying to sell a business, expect bankers to scrutinize the deal more closely in the wake of the COVID-19 pandemic.
Ryan Stoll, an SBA Banker at Cadence Bank, N.A. specializing in Franchise, Business Acquisition and Real Estate Lending, spoke to the GABB’s guest on Tuesday, June 16, about SBA lending and the Paycheck Protection Program (PPP) program.
Cadence Bank, along with many others, is asking clients to get help from their CPA’s to gather the information they will need to apply for forgiveness through the PPP program.
The Paycheck Protection Program (PPP) is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. New SBA guidelines have loosened forgiveness restrictions, according to Forbes, to make it easier for businesses to receive partial loan forgiveness.
Borrowers can qualify for partial loan forgiveness if less than 60% of the PPP loan is used for payroll, according to The Journal of Accountancy. The journal reported that a law signed June 5 lowered to 60% from 75% the minimum percentage of PPP funds borrowers have to spend on payroll costs to have the loans forgiven. But while the original PPP rules allowed for partial loan forgiveness under the 75% basement, the new bill passed by Congress had language that could be interpreted as saying that if the borrower did not spend at least 60% of the PPP funds on payroll costs, none of the loan would be forgiven.
“We fully anticipate the forgiveness process to take us into the first quarter of next year with many of our clients,” Stoll said. “We have 60 days to review the forgiveness application, and the SBA has 150 days to make a ruling on the forgiveness application. We’re going to be working on PPP deals into 2021.”
Cadence Bank funded just under 4,000 PPP loans worth about $1.2 billion to clients and non-clients.
In response to a question from GABB President Dean Burnette about how the PPP program will affect acquisition loans, Stoll said banks are going to be doing enhanced underwriting, more due to COVID-19 than the PPP. Loan officers are going to want to be assured that any business up for sale is able to open and do business.
Banks will want to know what precautions businesses have taken and “if there are projections provided on a deal, we need to know how COVID-19 was taken into account for the projections,” Stoll said.
“We need to have from our borrowers contingency plans for how they would operate if the economy is partially or fully shut down again,” Stoll suggested. Brokers representing sellers should have year over year statements to show the impact of the downtown. “We do expect that businesses were substantially impacted in the downturn.” But if a business can demonstrate a return to normal, “that has appeased my credit officers.
In larger transactions, credit officers will want more equity from the borrower and want the seller to hold more paper, Stoll said. Some in the industry think some service companies are over-leveraged at this time. “So we’re looking for more equity and a larger seller contribution on those types of transactions,” Stoll said. “I wouldn’t be surprised if you’re seeing banks coming back with a portion of the seller note or all of the seller note being on a payment standby for some period of time.”
But Cadence and other banks are still lending, although many bankers are warmer to essential services businesses than non-essential services businesses, he said.
“Expect us to be coming back with very firm, very final offers when it comes to the structure of the equity,” Stoll said. “There may be some negotiation with rates, but as far as equity goes, the credit officer will be very firm.”
The Georgia Association of Business Brokers, the state’s largest and most prominent association of professionals dedicated to the purchase and sale of businesses and franchises, is holding brief weekly meetings online during the pandemic. Business brokers, bankers, business attorneys and other professionals join the weekly calls to ask and answer questions about buying and selling a business during the pandemic.
To join the GABB’s Tuesday meetings, please go to
Meeting ID: 955 0652 0094
WASHINGTON—The U.S. Small Business Administration, in consultation with the U.S. Department of the Treasury, has issued new and revised guidance for the Paycheck Protection Program (PPP). This guidance implements the Paycheck Protection Program Flexibility Act (PPPFA), signed into law by President Trump on June 5, 2020, and expands eligibility for businesses with owners who have past felony convictions.
To implement the PPPFA, SBA revised its first PPP interim final rule, which was posted on April 2, 2020. The new rule updates provisions relating to loan maturity, deferral of loan payments, and forgiveness provisions.
These modifications implement the following important changes under the PPPFA:
- Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. Borrowers who have already received PPP loans retain the option to use an eight-week covered period.
- Lower the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent for each of these requirements. If a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.
- Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before February 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to worker or customer safety requirements related to COVID–19.
- Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on February 15, 2020, and unable to hire similarly qualified employees for unfilled positions by December 31, 2020.
- Increase to five years the maturity of PPP loans that are approved by SBA (based on the date SBA assigns a loan number) on or after June 5, 2020.
- Extend the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period).
- In addition, the new rules will confirm that June 30, 2020, remains the last date on which a PPP loan application can be approved.
In addition, the eligibility threshold for those with felony criminal histories has been changed. The look-back period has been reduced from 5 years to one year to determine eligibility for applicants, or owners of applicants, who, for non-financial felonies, have (1) been convicted, (2) pleaded guilty, (3) pleaded nolo contendere, or (4) been placed on any form of parole or probation (including probation before judgment). The period remains 5 years for felonies involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance. The application also eliminates pretrial diversion status as a criterion affecting eligibility.
SBA issued revised PPP application forms to conform to these changes. The guidance and revised application forms are available on SBA’s and Treasury’s websites. SBA will issue additional guidance regarding loan forgiveness and a revised forgiveness application to implement the PPPFA in the near future.
SBA Administrator Jovita Carranza and U.S. Treasury Secretary Steven T. Mnuchin praised the Paycheck Protection Program (PPP) Flexibility Act, signed into law by President Trump on June 5. They issued this statement:
“We want to thank President Trump for his leadership and commend Leader McConnell, Leader Schumer, Speaker Pelosi, and Leader McCarthy for working on a bipartisan basis to pass this legislation for small businesses participating in the Paycheck Protection Program.
“We also want to express our gratitude to Chairman Rubio, Ranking Member Cardin, Senator Collins, Congressman Roy, Congressman Phillips, and other members of Congress who have helped to create and guide our implementation of this critical program that has provided over 4.5 million small business loans totaling more than $500 billion to ensure that approximately 50 million hardworking Americans stay connected to their jobs.
“This bill will provide businesses with more time and flexibility to keep their employees on the payroll and ensure their continued operations as we safely reopen our country.
“We look forward to getting the American people back to work as quickly as possible.”Read More
ATLANTA, GA: The Georgia Restaurant Association (GRA), working with Atlanta-based digital learning company MLevel, is offering THRIVE Georgia – a training program that allows businesses with up to 500 employees in the Georgia restaurant sector to educate their employees virtually on the latest state regulations to ensure they are compliant and safe.
THRIVE Georgia courses cover dining room configuration and layout; employee safety; and environmental safety and sanitation, ensuring employees understand what is expected of them and to keep themselves and their colleagues safe.
For 10 weeks, restaurants will have access to complimentary training, developed in collaboration with various restaurant and legal partners, and the powerful analytics on the MLevel platform. The goal of the training is to quickly achieve content mastery and for everyone in the restaurant to feel better prepared to get back to business. Updates to content will be made in real-time as Georgia regulations evolve with the nature of the pandemic.
Georgia Gov. Brian P. Kemp signed an order, effective June 16, 2020, relaxing some restrictions on restaurants. In restaurants and dining rooms, there is no longer a party maximum for the number of people who can sit together, according to the governor’s office. There is no longer a limit on the number of patrons allowed per square foot. Workers at restaurants, dining rooms, banquet facilities, private event facilities, and private reception venues are only required to wear face coverings when they are interacting with patrons. In a bar, now you can have fifty people – up from twenty-five – or thirty-five percent of total listed fire capacity, whichever is greater. For salad bars and buffets, a worker can use cafeteria-style service to serve patrons or the establishment can provide hand sanitizer, install a sneeze guard, enforce social distancing, and regularly replace shared utensils to allow patron self-service.
“Safety is and has always been our industry’s number one priority. It is a critical time for restaurants to do everything they can to elevate customer confidence, including employee education,” said GRA CEO Karen Bremer. “The THRIVE Georgia COVID-19 mitigation training program perfectly aligns with Governor Kemp’s latest executive order, and will continue to be updated as regulations change. This is an opportunity I hope every restaurant in Georgia takes advantage of.”
To apply, businesses simply need to visit the THRIVE Georgia website and fill out the waiver and information form. Once submitted, applicants will receive their login credentials within two business days from the MLevel team. Upon competition, restaurants will receive a THRIVE Georgia certificate to display in the restaurant.
“We are excited to be able to partner with the Georgia Restaurant Association and help our fellow small business owners reopen. We want to provide confidence to our fellow community members in Georgia so they can return to enjoying the pleasure of eating out and support our local businesses,” said MLevel CEO Jordan Fladell.
About MLevel: MLevel is an industry leading, digital learning platform based in Atlanta. Utilizing microlearning and gamification backed by powerful analytics, they empower their clients and learners to achieve job mastery. Learn more at www.mlevel.com.
About the Georgia Restaurant Association (GRA): The GRA’s mission is to serve as the voice for Georgia’s Restaurants in Advocacy, Education and Awareness. The GRA is sanctioned by the National Restaurant Association (NRA) to operate Georgia’s only not-for-profit representing the state’s foodservice industry. From large chains to start-ups, the GRA helps make Georgia a better place for restaurants to do business and helps make restaurants better for Georgia. For more information, visit www.garestaurants.org.
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Reopening a business after a shutdown will be a spring, and could take more effort and preparation than shutting it down.
That’s what business coach Russ Hall said to the Georgia Association of Business Brokers during the group’s weekly videoconference on June 9.
View Russ’s PPT presentation here. Rethink Reinvent Reopen PPT
Hall is a GABB affiliate and an Action Coach with an organization focused on helping the owners and teams of small businesses improve performance so that they can improve their lives. Business brokers and others who may be solopreneurs can use these suggestions to garner positive PR and visibility in the community, Hall said.
Hall’s presentation gave business professionals something they can use to stay engaged with people that’s positive and forward-thinking as opposed to negative and a downer.
A former US Naval Aviator, Hall spent 21 years with a Fortune 100 company in the Healthcare Technology sector, leading and managing teams in Sales and Customer Service. He earned a Master’s in Industrial-Organizational Psychology at the University of Georgia, studying the application of evidence-based methods to the improvement of individuals and teams in business and other organizations.
The GABB is the state’s largest and most prominent association of professionals dedicated to the purchase and sale of businesses and franchises, and operates the state’s only professional real estate school dedicated to business brokering.
To join the GABB’s Tuesday meetings, please go to
Meeting ID: 955 0652 0094
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Concerned about your financial future due to the COVID-19 Crisis? John Mills of Tax Centers of Georgia told members of the GABB about ways you can borrow from your retirement savings without penalty and other tax strategies.
As the COVID-19 virus wreaks havoc on our personal life and financial markets, Mills discussed little known strategies to help businesses and individuals negotiate current financial hardships. The Georgia Association of Business Brokers (GABB) is hosting weekly meetings to answer members’ questions during this pandemic.
Mr. Mills, a partner in Tax Centers of Georgia, said that the CARES Act provides an unusual opportunity to get access to your 401k or IRA investments without age restrictions or penalties.
He said many tax experts think “average” income earners could be paying as much as 37-54% in taxes in the near future. He discussed how and investor could add hundreds of thousands dollars of tax-free cash flow to retirement income without any additional savings.
Under the CARES Act, who can get money out of a 401k and/or IRA? Anyone:
- Who is diagnosed with COVID-19 by a test approved by the Centers for Disease Control and Prevention.
- Whose spouse is dependent (generally a qualifying child or relative who receives more than half of his or her support from you) is diagnosed with COVID-19 by such a test.
- Who experiences adverse financial consequences as a result of quarantine, furlough, layoff, or having work hours reduced due to COVID-19.
- Who is unable to work because of lack of child care due to COVID-19 and experiences adverse financial consequences as a result.
- Who owns or operates a business that has closed or had operating hours reduced due to COVID-19 and has experienced adverse financial consequences as a result.
- Who has experienced adverse financial consequences due to other COVID-19 related factors to be specified in future IRS guidance.
COVID-19 401k/IRA Plan Details
- Loans will move from 50% or $50,000 to 100% or $100,000 that you can borrow. This options ends on September 23rd. Your plans loan rates can vary from other plans. You then pay back the loan over 5 years (this can be done with payroll deduction and dramatically increase your savings above the IRS rules).
- If you qualify (based on COVID-19 rules) you can withdraw up to $100,000. You will not be subject to the IRS under 59 ½ rule requiring a 10% penalty. End date for this is 12/31.
- If taken as a distribution, taxes owed can be spread over three years or you can choose to pay the taxes lump sum at the end of three years and skip the tax now.
- This is a one-time opportunity, Mills said.
Option #1: Loan
- Take up to a $100,000 loan from your 401k plan or any other lesser amount.
- Pay back the loan through payroll deduction over 5 years or, in a lump sum at the end of five years. Be your own bank! If you can afford more than the $20,000 limit of your normal contribution, you can now deposit $40,000 per year into your 401(k) (normal contribution plus loan each year.
- Your interest rate may be PRIME (currently about 3.25%). Each plan can vary on the rate, but rates are at an all time low.
- You now have $100,000 in your hands, income tax free.
- Just because you could take a loan, doesn’t mean you should, Mills advised.
Option #2: Distribution
- Take” the full $100,000 as a distribution from your 401k or IRA
- This could be the only time in your lifetime that you can get money out of your pre-tax account while under 59 ½ without a 10% penalty.
- The tax can be spread over three years (Due April 2021, 2022 and 2023)
- Assuming a 24% tax rate, that would mean only $8,000 in tax each year. This can be paid from savings or any other non-qualified investment you may have. If pay in 4 installments (1 immediate and 3 more over 2021-23) it would mean 4 installments of only $6,000.
- How does that benefit you to pay these small taxes over 3 years?
Alternative #1: Roth Conversions
- There is no limit on the amount you can convert from IRA or 401K to Roth
- The CARES ACT however limits the amount you can draw out of your IRA or 401k without the 10% penalty ($100,000 “per person”)
- The Roth will still have the 10% penalty before age 59 ½ and even if over that age you must hold the Roth for 5 years before accessing any of the money.
- Depending on where you invest the Roth money (Stocks, Bonds, Mutual Fds etc.) you still carry all the risk as you did in the 401(k).
What else can you do with the money?
- What if we could get the money to grow tax-deferred (the $100,000) and have it come out 100% Tax-FREE (like the Roth)?
- What if you passed away prematurely and your family then received a large sum, potentially 3 times the amount of money you took out, again…100% Tax-FREE?
- What if you had a chronic illness or required a Long-Term Care stay and you could have money to help cover your stay…100% TAX-FREE?
- What if you had a short-term financial need and you could access this same money again without any 10% governmental penalty or tax BEFORE age 59 ½ ?
Can I really do that?… YES
- Borrow OR take your distribution (or any part of the maximum) and place it in a 7702 plan using life insurance vehicles. Immediate potential benefit for your family should you pass of $336,000*
- Cash then grows tax-deferred and comes out tax free for your retirement or whenever you might need it **.
- Take your tax-free income for 10, 20 years or possibly longer in retirement.
- Receive proceeds in case of a chronic illness or Long-term care need…TAX-FREE.
- Cover a college education or wedding…TAX-FREE.
To find out more, Mills invites businesses and individuals to contact him.
Linked below is Mr. Mills’ PowerPoint presentation.Read More