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 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.
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.
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.
SOP 50 51 2A, Ch. 17, 8-12 states that “[a]ny settlement amount must bear a reasonable relationship to the present value of the estimated amount of recovery available through foreclosure (using a forced sale equivalent value) and enforced collection. This value, combined with the earning potential of the debtor, will form the basis for the offer in compromise.“ Litigative risks” involve answering certain legal questions as to the actual liability of the debtor and will be thoroughly explored by the SBA, if raised properly. The degree of doubt coupled with the potential costs, expenses and time involved in pursuing collection matters will generally determine the acceptable amount for a settlement. Thus, when considering an SBA OIC, it is very important for your qualified representative (who should have a background in litigation and thus be an attorney and have a working knowledge of SBA matters) to be able to advise SBA debtors regarding litigative risks and the costs associated with litigation and how all of these factors can impact the proposed offer to the Federal Government.
Creditors' committees commonly occur in traditional Chapter 11 cases, but they need a cause in Subchapter V cases.
Subchapter V trustees' primary function is to create a standard plan with the debtor and creditor. They do have the authority to audit the debtor's finances, but their primary purpose is mediation.
The reason for this is Congress sees impartial third-parties' increasing the likelihood of a sound resolution among the debtor and its creditors. Unbiased third parties are especially useful for small businesses whose creditors are tentative as a result of COVID.
What Is The SBA Office Of Hearings And Appeals (OHA) And What Is Their Jurisdictional Power? CollapseThe Office of Hearings and Appeals (OHA) is an independent office of the Small Business Administration (SBA) established in 1983 to provide an independent, quasi-judicial appeal of certain SBA program decisions. The SBA OHA has authority to conduct proceedings in the following cases: Collection of debts owed to SBA and the United States under the Debt Collection Act of 1982, the Debt Collection Improvement Act of 1996, and part 140 of the aforesaid chapter; (t) Any other hearing, determination, or appeal proceeding referred to OHA by the Administrator of SBA, either through an SOP, Directive, Procedural Notice, or individual request by the Administrator to the SBA/OHA. The SBA OHA’s office is on the eighth floor of SBA headquarters above the Federal Center SW metro stop. Their office address is: 409 Third Street, SW, Eighth FloorWashington, DC 20416
Even if your business incorporated (i.e. corporation, Limited Liability Company), almost all lenders and the SBA required that you sign personal guarantees as part of the initial loan funding process. Therefore, despite the fact that your business entity signed on the Loan Agreement with the bank or CDC, you would still be liable as a result of the personal guaranty that you or any other individuals signed. The personal guaranty, upon default on the loan, gives the bank or CDC and the SBA direct access to your personal assets such as your home, personal bank accounts, investments, real estate, etc.
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