SBA Default and Offer In Compromise.
SBA Default and Offer in Compromise - the OIC process may allow you to settle your loan for pennies on the dollar.
Most people start their own business with the highest of hopes. Many times, to fund a new business, a person will receive a loan through the SBA (Small Business Administration). While these loans are administered through the SBA, they are often facilitated by individual lenders. However, if a small business taking out one of these loans was to encounter financial disaster, which causes the business close, there would likely be an issue with SBA loan default
In many of these instances, lenders will try to close the books on a particular loan by something known as an SBA Offer in Compromise. This is an agreement between the lender and the borrower to repay a portion of the loan when full repayment isn't possible. The problem that many small businesses face is dealing with the SBA OIC claim form, as well as dealing with a less than a reputable lender. This is where attorneys may be helpful to the individual or business that initially took out the SBA loan.
Often, when the loan is in default, the business or the business owner will receive an SBA demand letter. This is where the offer in compromise process should begin. An attorney can help negotiate with the lender to achieve the best terms for the offer in compromise. What this does is cleans the slate and allows the owner to walk away from the loan having it settled and not having it existing on the owner's credit report.
However, SBA loan foreclosure can also provide an opportunity for an attorney to mitigate the default in a different manner. The fact is that there has been significant issues with predatory lending in the small business administration loan process. There are many lenders that have used improper tactics and submitted loans with less than equitable fees and interest rates. If a small business feels as if this is the case with their lender, an attorney can investigate this issue and can bring these issues before the Small Business Administration.
Whether it's a Tax Offset Program, a delicate negotiation for an offer in compromise or if it's uncovering predatory lending practices, having an SBA loan attorney is essential. While it's never fun to attend to things after a business idea has failed, this is one way to ensure that there are less financial repercussions after everything is said and done.
Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure
Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements
Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.
Our firm successfully assisted a client in closing an SBA Disaster Loan tied to a COVID-19 Economic Injury Disaster Loan (EIDL). The borrower obtained an EIDL loan of $153,800, but due to the prolonged economic impact of the COVID-19 pandemic, the business was unable to recover and ultimately closed.
As part of the business closure review and audit, we worked closely with the SBA to negotiate a resolution. The borrower was required to pay only $1,625 to release the remaining collateral, effectively closing the matter without further financial liability for the owner/officer.
This case highlights the importance of strategic negotiations when dealing with SBA settlements, particularly for businesses that have shut down due to unforeseen economic challenges. If you or your business are struggling with SBA loan debt, we focus on SBA Offer in Compromise (SBA OIC) solutions to help settle outstanding obligations efficiently.
Client received the SBA's Official 60-Day Notice for a loan that was obtained by her small business in 2001. The SBA loan went into default in 2004 but after hearing nothing from the SBA lender or the SBA for 20 years, out of the blue, she received the SBA's collection due process notice which provided her with only one of four options: (1) repay the entire accelerated balance immediately; (2) negotiate a repayment arrangement; (3) challenge the legal enforceability of the debt with evidence; or (4) request an OHA hearing before a U.S. Administrative Law Judge.
Client hired the Firm to represent her with only 13 days left before the expiration deadline to respond to the SBA's Official 60-Day Notice. The Firm attorneys immediately researched the SBA's Official loan database to obtain information regarding the 7(a) loan. Thereafter, the Firm attorneys conducted legal research and asserted certain affirmative defenses challenging the legal enforceability of the debt. A written response was timely filed to the 60-Day Notice with the SBA subsequently agreeing with the client's affirmative defenses and legal arguments. As a result, the SBA rendered a decision immediately terminating collection of the debt against the client's alleged personal guarantee liability saving her $50,000.
Clients executed several trust deeds pledging seven (7) real estate properties and unconditional personal guarantees for an SBA 7(a) loan from the participating lender. The clients' small business failed and eventually defaulted on repayment of the loan exposing all collateral pledged by the clients. The SBA subsequently acquired the loan balance from the lender, including the right to liquidate and collect all pledged collateral pursuant to the trust deed instruments.
The Firm was hired to negotiate separate release of lien proposals for all 7 real estate properties. In preparation for the work assignment, the Firm Attorneys initiated discovery to secure records from the SBA and Treasury's Bureau of Fiscal Service. After reviewing the records and understanding the interplay between the lender and the SBA, the attorneys then prepared, submitted and negotiated the release of lien (ROL) for each of the 7 real estate properties for consideration.
After submitting the proposals, the assigned SBA Loan Specialists approved each ROL package - significantly reducing the total SBA debt claimed.
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