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.
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.
Client's small business obtained an SBA COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement. The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.
The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.
The Firm was hired to investigate and find an alternate solution to the bankruptcy option. After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.
Client personally guaranteed an SBA 7(a) loan to help with a relative’s new business venture. After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against his monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars. We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA). As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy) but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.
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