News From USABizMart, News About Buying And Selling Businesses

Posted on March 1, 2009 by PeterSiegel, MBA

SBA Loan Update - Goodwill Debate Continues

Because SBA does not have data specifically identifying goodwill in business acquisitions and because the Agency has been told there are limited options for those borrowers wishing to finance a business acquisition involving a substantial amount of goodwill, SBA has decided that it will review loan applications that do not meet the guidance in the SOP.

For loan applications where the request for 7(a) financing of goodwill exceeds the limits set in SOP 50 10 5(A) because the buyer and/or the seller are unable to finance the amount of goodwill that exceeds the SOP limit, the lender may submit the application to the Standard 7a Loan Guaranty Processing Center (LGPC) for SBA's consideration.

This process will be in place through August 31st, 2009. At that time, SBA will provide further guidance on this issue. During this six month period, SBA will collect information from the applications submitted to the LGPC and analyze the types of businesses and transaction structures submitted.

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Categories: Industry News
Posted at: 1:15pm | 0 Comments |

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Posted on February 18, 2009 by PeterSiegel, MBA

Proposed SBA 7(a) Program SOP Changes

Proposed SBA March 1, 2009 7(a) Program SOP

Language added in Subpart B section 7(b) of this newest revision of the SOP:

Goodwill:

If the purchase price of the business includes goodwill (or "blue sky"), the lender should explore seller-financing with a subordinate lien to the SBA-guaranteed loan.

The lender may finance a limited amount of goodwill. In no event may the amount of goodwill financed by an SBA guaranteed loan exceed 50% of the loan amount up to a maximum of $250,000.

If any of the loan proceeds will be used to finance goodwill, the amount must be specifically identified in the Use of Proceeds section of the Authorization.

The new language effectively caps the amount of goodwill financing to $250,000. What can you do?

Send a letter to your local Representative and both of our senators asking to not allow this change to happen!

Tags: sba loans
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Posted at: 3:36pm | 0 Comments |

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Posted on January 7, 2009 by PeterSiegel, MBA

SBA 7(a) Loans Plunge 57% in First Quarter

SBA's flagship loan program is down significantly in the first quarter, which ended Dec. 31, 2008. The SBA's 7(a) program backed 8,996 loans. That's a 57% drop from the 20,859 loans the SBA backed in the first quarter of 2008, and a 62% drop from 2007's first-quarter total.

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Posted at: 4:22pm | 0 Comments |

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Posted on January 7, 2009 by PeterSiegel, MBA

Definition Of Appraisers By IRS

IRS Final Regulations Retain Definition of Appraisers as Return Preparers

Despite significant appraiser profession testimony at the IRS hearing last Summer on the proposed regulations under section 6694, the IRS has issued final regulations that retain the definition of appraisers among the practitioners that may be defined as return preparers and thus subject to the penalties under that section.

The relevant explanatory language from the final regulation is as follows:

"Appraisers"

Under Treasury Regulations in place since 1977 and the proposed regulations, an appraiser might be subject to penalties under section 6694 as a nonsigning tax return preparer if the appraisal is a substantial portion of the return or claim for refund and the applicable standards of care under section 6694 are not met. Several commentators have stated that appraisers should not be subject to penalties under section 6694 because they are subject to new, higher standards of conduct under section 6695A as set out in the Pension Protection Act of 2006, Pub. L. No. 109-280. The commentators have also urged that assessment of penalties under section 6694 against appraisers would result in imposition of a gratuitous and unnecessary layer of requirements and sanctions without any additional public policy benefit.

After consideration of the comment, the Treasury Department and the IRS continue to include appraisers in the definition of both signing and non-signing preparers, thereby providing the IRS with discretion to impose the section 6694 and 6695A penalties in the alternative against an appraiser depending on the facts and circumstances of the appraiser's conduct. The IRS, however, will not stack the penalties under sections 6694 and 6695A with respect to the same conduct. A separate regulation will provide guidance under section 6695A .