Can't Pay Your SBA Loan? Here's How to Qualify for an SBA Loan Deferment
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.
Whether you have defaulted on an SBA loan or have moved on from your business partners options exist for eliminating your debt.
Book a Consultation CallIf your business obtained an SBA loan, you more than likely signed a personal guarantee. This personal guarantee states that although the business was the borrower for the loan, you remain personally liable if the business defaults on the SBA loan.
If you were a partner in a business and left the business, were bought out of the business or gave the business to your spouse as part of a divorce the personal guarantee means you remain liable for the debt even thought you have nothing to do with the business.
In either case, you need a strategy to resolve your personal liability on the SBA debt.
If the business defaulted on the SBA loan and the SBA seeks satisfaction from you personally, an offer in compromise exists as a solution. An offer in compromise means that you offer to settle the debt from something less than the deficiency.
The amount of the compromise will depend on many factors such as your assets and liabilities; your income and expenses; the amount the government could collect from you through enforced collection; and "litigative risks" the government faces if it did attempt to enforce collection. Every situation and fact pattern is unique. The range for an offer in compromise can be as little as 2 cents on the dollar and as high as 90 cents on the dollar.
An alternative to the offer in compromise is the repayment plan. If your income is too high relative to the debt, for instance, the SBA may reject an offer in compromise. A repayment plan allows you to repay the debt in full over time.
The benefits of a repayment plan include: 1. Preserving liquidity; 2. Preserving the opportunity to obtain government backed loans in the future such as FHA, VA or SBA loans; and 3. May affect your credit score less.
If, however, the business remains operational but you are no longer involved in the business due to buyout, divorce, etc., you will want the SBA to release you from your guarantee. This is easier said than done.
The SBA will naturally want something in return to let you out of your personal guarantee. Moreover, the release must not: jeopardize the ability to maximize recovery on the loan; shift the risk of loss to SBA; or otherwise harm the integrity of the SBA loan program. This means that a release will require that the SBA remain in as good or better position after the release than before the release. Without some type of consideration for the release such as the substitution of another guarantor, it is unlikely that the SBA will approve the request.
Protect Law Group successfully handles SBA loan matters for clients all over the nation. Our attorneys are experienced in dealing with the SBA and have the knowledge to successfully resolve your SBA loan problem.
Contact us today at 833-428-0937 to set up your consultation or contact us at www. sba-attorneys.com
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.
Small business sole proprietor obtained an SBA COVID-EIDL loan for $500,000. Client defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for aggressive collection. Treasury added $180,000 in collection fees totaling $680,000+. Client tried to negotiate with Treasury but was only offered a 3-year or 10-year repayment plan. Client hired the Firm to represent before the SBA, Treasury and a Private Collection Agency. After securing government records through discovery and reviewing them, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury citing a host of purported violations. The Firm was able to negotiate a reinstatement and recall of the loan back to the SBA, participation in the Hardship Accommodation Plan, termination of Treasury's enforced collection and removal of the statutory collection fees.
Clients personally guaranteed SBA 7(a) loan balance of over $300,000. Clients also pledged their homes as additional collateral. SBA OIC accepted $87,000 with the full lien release against the home.
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.
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