Are you unable to pay off your SBA loan or need to decrease the amount you pay? It's possible to get an SBA loan deferment. Here's how to qualify.
Book a Consultation CallWhile half of all small businesses fold in the first five years, lots of businesses could be saved if they only knew how to manage their finances. If you're struggling with SBA loans, a simple loan deferment could save your business from ruin. The ability to bounce back from bumps in the road is something that every business owner should have the chance to do.
SBA Loan Deferment
Here are four major factors to consider in order to get the help you need.
If you haven't been keeping your books up to date, you need to ensure that you've got the evidence to talk about your cash flow. The SBA has encouraged everyone lending its specialized loans to be more flexible than they were in the past. If you need a deferment, you need to show that you're truly in the position to need one.
Cash flow is how much money you're making balanced out with how much you're spending from month to month. If you've got a log of outstanding IOUs from your clients, then you need to focus on getting that money into your accounts. If you're bad at getting the cash you're owed into your account, that's not an issue of cash flow so much as management.
You could qualify for a deferment if sales have slowed and you're doing everything right. If you have too little cash, then they might think that you're beyond help and they might not want to offer you a deferment. If you have too much cash flow coming in, then the SBA or lenders are going to think that you just need to manage your business better.
Low cash flow for a business model that's fairly good could just be a temporary issue. If you're sure that the cash flow problem is temporary, make sure that your books show that fact.
If you're looking for help with your SBA loans, you need to show that you're on the right track. Deferment isn't offered to those terminal cases where money is just burning up as the clock ticks. It's given to companies who have their act together but who are struggling with some basic issues.
Sometimes those issues are outside of your control. With the 2019 government shutdown or changes in tariffs for manufacturing materials, that trickle down impacts lots of companies. While most people don't think that their daily lives are impacted by these political conversations, there are concrete impacts all over.
When the price of steel goes up, it costs more to buy a car. If the price of gas or fuel goes up, then the cost of a plane ticket goes up too. No matter what your industry is, you could see some issues that cause your profits to dip, even just temporarily.
If you're operating with very thin margins, describe that to your lender in very clear terms. If you've been making on-time payments otherwise, then show them the records. A responsible company that pays their bills and loans on time regularly is one that is worth offering consideration to.
Your ability to qualify for deferment relies heavily on how responsive you are to the lender you're looking for help from. When you want consideration regarding your SBA loan or need a deferment for your SBA payments, you need to communicate clearly. The people who are trying to help you need you to be clear and communicate with them in an open and prompt manner.
If the lender you're looking for help from asks for documentation by a certain deadline, attempt to beat the deadline by a few days. While it may seem obvious to you, lots of business owners put this communication at a low priority. It's not up to your lender to follow up with you when you're the one looking for help from them.
Should a deadline for documentation pass, you're going to need to approach your lender with your hat in hand. And you'd better have everything in proper order if you're going to try to get them to bend the rules for you. Going in unprepared or without everything they need is going to seem arrogant.
If you need to put together an application package for deferment, league time to put together the document. At the end of the day, you're asking for something from your lender or service provider. You should do more than meet them halfway when it comes to giving them what they ask for.
When you're looking for help deferring your loan you need to show that you've got a reason to balance things out. When you have collateral to offer, you show that you're working hard and trying to make your business work.
Your lender can get aggressive when you're behind on payments. If your loan is secured with equipment that you need to build your business, they're going to want to help you out. It's much harder to try to flip equipment, especially if your company relies on it.
If they really want you to succeed, they're going to want you to keep that equipment so you can do the work you need to in order to pay them back. They're in the business of building wealth, not cutting you off at the knees.
If your lender has collateral that's worth way more than what you owe, they might flip it if your business model doesn't seem strong. Make sure you communicate clearly at the first sign of trouble to protect your business model.
If you want to get the loan deferment that you deserve as a business owner, you need clear communication and a good relationship with your lender. The clearer you are with them, the easier it'll be to get your deferment.
If you are in danger of defaulting on your SBA loan, contact Protect Law Group today for a FREE initial consultation. 1-888-756-9969.
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 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 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.
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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