Manufacturing Business SBA Loan Default: Industry-Specific Defense Strategies
Explore industry-specific strategies for manufacturing SBA loan defaults. Gain insights to protect your business from severe default consequences.
A loan guaranteed by the Small Business Administration can open a lot of doors for a business. They could use the funds to purchase real estate, equipment or even to finance their debts. Unfortunately, because this economy is still not completely back on track following the recent recession, it's quite possible a company will run into problems paying their SBA loan. Although it might be possible for a business owner to negotiate a settlement after they receive an SBA demand letter, it could be much easier to manage with the help of an attorney.
SBA loan default is a serious matter and each case is as different as every business that uses this loan program. Default could result in SBA loan foreclosure or seizure of business or even personal tax refunds through the Tax Offset Program. Neither of these options are going to be very appealing to a business owner who is struggling to keep their company afloat. The first step a business owner should take when they are faced with this situation is to find an attorney who has enough experience in this area to analyze each case individually and devise a solution that could benefit the business owner and the SBA.
Any business owner who has defaulted on an SBA loan can send an SBA Offer in Compromise to attempt to settle the debt. The SBA carefully evaluates each request for this type of loan forgiveness and if there are any errors, omissions or misrepresentations, the application is likely to be denied and the business owner will have to find another way to resolve the debt. Instead of going through this process alone, an entrepreneur might have a much better chance of success if they work with an attorney who has a proven track record.
This is not something business owners need to handle alone. Getting professional help is essential to having a favorable outcome in this complicated debt situation. Once an entrepreneur knows what they want to get out of the process, they should contact an attorney to give them the best chance of getting something close to that result.
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 resolved an SBA 7(a) loan default in the amount of $140,000 on behalf of a husband-and-wife guarantor pair. The business had closed following a prolonged decline in revenue, leaving the borrowers personally liable for the remaining balance.
After conducting a comprehensive financial analysis and preparing a detailed SBA Offer in Compromise (SBA OIC) package, we negotiated directly with the SBA and the lender to achieve a settlement for $70,000 — just 50% of the outstanding balance. This settlement released the borrowers from further personal liability and allowed them to move forward without the threat of enforced collection.
Clients executed personal and corporate guarantees for an SBA 7(a) loan from a Preferred Lender Provider (PLP). The borrower corporation defaulted on the loan exposing all collateral pledged by the Clients. The SBA subsequently acquired the loan balance from the PLP, including the right to collect against all guarantors. The SBA sent the Official Pre-Referral Notice to the guarantors giving them sixty (60) days to either pay the outstanding balance in full, negotiate a Repayment (Offer in Compromise (OIC) or Structured Workout (SW)), challenge their alleged guarantor liability or file a Request for Hearing (Appeals Petition) with the SBA Office of Hearings & Appeals.
Because the Clients were not financially eligible for an OIC, they opted for Structured Workout negotiations directly with the SBA before the debt was transferred to the Bureau of Fiscal Service, a division of the U.S. Department of Treasury for enforced collection.
The Firm was hired to negotiate a global Workout Agreement directly with the SBA to resolve the personal and corporate guarantees. After submitting the Structured Workout proposal, the assigned SBA Loan Specialist approved the requested terms in under ten (10) days without any lengthy back and forth negotiations.
The favorable terms of the Workout included an extended maturity at an affordable principal amount, along with a significantly reduced interest rate saving the Clients approximately $181,000 in administrative fees, penalties and interest (contract interest rate and Current Value of Funds Rate (CVFR)) as authorized by 31 U.S.C. § 3717(e) had the SBA loan been transferred to BFS.
Clients' 7(a) loan was referred to Treasury's Bureau of Fiscal Service for enforced collection in 2015. They not only personally guaranteed the loan, but also pledged their primary residence as additional collateral. One of the clients filed for Chapter 7 bankruptcy thinking that it would discharge the SBA 7(a) lien encumbering their home. They later discovered that they were mistakenly advised. The Firm was subsequently hired to review their case and defend against a series of collection actions. Eventually, we were able to negotiate a structured workout for $180,000 directly with the SBA, saving them approximately $250,000 (by reducing the default interest rate and removing Treasury's substantial collection fees) and from possible foreclosure.
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