We Provide Nationwide Representation of Small Business Owners, Personal Guarantors, and Federal Debtors with More Than $30,000 in Debt before the SBA and Treasury Department's Bureau of Fiscal Service
No Affiliation or Endorsement by any Federal Agency
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 7a loan in the original amount of $364,000 for a New Jersey-based borrower. The client filed Chapter 7 bankruptcy but the mortgage on his real estate securing the loan remained in place. The available equity amounted to $263,470 and the deficiency equaled $317,886.
We gathered the pertinent documentation and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the mortgage for $80,000.
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.
If the principal debtor used his/her primary residence as security for a loan to fund the small business, there are available loan modifications.
If as part of your SBA loan, you pledged your primary residence as collateral, neither Chapter 7 or Chapter 13 bankruptcy will likely help in the event of default. However, Chapter 11 Subchapter V may help.
For instance, a small business debtor's plan may modify the rights of a holder of a claim secured by the principal residence of the debtor if the new value received in connection with the granting of the security interest was:
Therefore, you could possibly use the Chapter 11 Subchapter V to save your house and modify the terms of repaying the loan if you pledged your house as collateral as part of your personal guarantee. You will, more than likely, not rid yourself of the lien. Preserving your home constitutes your goal with the new bankruptcy code. If you have no other options, you should explore the new bankruptcy option.
An SBA Loan Deferment is a temporary remedial option. If your business is having short term financial difficulty because of a seasonal slump and can reasonably prove through pro forma financial statements to your lender or CDC that a turnaround is around the corner and you need brief relief from paying on the SBA loan, you should consider applying for a deferment. Generally, if you qualify, your bank or CDC, with the SBA’s approval can provide you with either a six (6) month or twelve (12) month reprieve from paying either the principal amount (and allow interest-only payments) or no principal and interest. However, if you consider this option, be advised that you may be asked to reaffirm the loan with personal guarantees or even pledge additional collateral. Needless to say, this is not an option that you should consider without either representation or consultation with a qualified practitioner.
To be eligible for this option, a debtor must meet the following criteria:
The CARES Act further expanded the eligibility for businesses to qualify under this bankruptcy path.
This legislation increases the eligibility pool to also include companies with up to $7,500,000 in debt (both secured and unsecured) to reorganize under Subchapter V. This is a significant increase from the otherwise limit of $2,725,625.
An SBA Offer in Compromise is generally on out-of-court work out option for a business which probably needs to shut down and there is no reasonable turnaround plan that can be executed to resurrect it from its current financial quandary. Furthermore, this remedial option is best utilized when it is apparent that the business’s pledged collateral is insufficient to pay off the outstanding loan balance and the personal guarantees of the owners are at stake.
Charge off is the process by which the SBA recognizes a loss and removes the uncollectible loan account from its active receivable accounts. The SBA’s policy is to be diligent and thorough in collection of federal debt and to promptly charge off all uncollectible accounts to more accurately reflect the status of the individual account and the Agency’s entire portfolio. It should be noted that a charge off is merely an administrative determination that does NOT affect SBA’s rights against any obligor nor reduce the SBA’s (or a participant lender’s) ability to proceed with any available remedy.
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