Small business owners who mismanage their finances could default on their Small Business Administration loan. To default, they must become delinquent for ninety days. At this point, their lender could exceed standard collection practices. These actions could include seizure of business assets such as bank accounts and real properties. A SBA Offer in Compromise could give the business owner an opportunity for settling the debt without serious repercussions.
After the SBA loan default, the lender notifies the borrower of probable action if they don't contact the lender and make arrangements for payment. The borrower has a deadline for these measures and should contact their attorney quickly. Once they have the SBA demand letter, their attorney could negotiate a settlement. Since the seizure process could increase the lender's costs, they are more likely to accept an appropriate offer.
Once the delinquency reaches ninety days, the loan enters default. At this stage, the lender is within their rights to acquire assets and the collateral used to secure the loan. They conduct the seizure process to acquire a balance that reflects what is owed by the borrower. Since the SBA is a government agency, they have federal rights and take action accordingly.
Any property listed on the loan documentation as collateral is seized immediately. This includes automobiles, real property, and business accounts. If this value doesn't reflect the balance owed, the agency could acquire more property and assets. Through a SBA loan foreclosure, they could acquire the borrower's primary residence if it was purchased with company funds.
A tax offset is a settlement in which the consumer could use their tax refunds to pay the balance. The lender seizes their tax refunds each year until the balance is paid off. If the borrower is behind on their tax payments, their attorney could acquire a settlement for the outstanding balance. A Tax Offset Program could help these consumers.
Small business owners should follow strategies for avoiding the effects of a SBA default. These actions could equate to total seizure of the business assets and properties. Business owners who wish to avoid these circumstances should contact an attorney now.
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 facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) where borrower received an SBA disaster loan of $150,000, but due to the severe economic impact of the COVID-19 pandemic, the business was unable to recover.
Despite the borrower’s efforts to maintain operations, shutdowns and restrictions significantly reduced the customer base and revenue, making continued operations unsustainable. After a thorough business closure review, we negotiated with the SBA, securing a resolution where the borrower paid only $6,015 to release the collateral, with no further financial liability for the owner/officer.
This case demonstrates how businesses affected by the pandemic can navigate SBA loan settlements effectively. If your business is struggling with an SBA EIDL loan, we specialize in SBA Offer in Compromise (SBA OIC) solutions to help close outstanding debts while minimizing financial burden.
The clients are personally guaranteed an SBA 7(a) loan. The SBA referred the debt to the Department of Treasury, which was seeking payment of $487,981 from our clients. We initially filed a Cross-Servicing Dispute, which was denied. As a result, we filed an Appeals Petition with the SBA Office of Hearings and Appeals asserting legal defenses and supporting evidence uncovered during the discovery and investigation phase of our services. Ultimately, the SBA settled the debt for $25,000 - saving our clients approximately $462,981.
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.
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