If you Owe more than $30,000 contact us for a case evaluation at (833) 428-0937
contact us for a free case evaluation at (833) 428-0937
Call us (833) 428-0937

Explanation of the Act: Navigating the Complete COVID Collections Act

Dive into the Complete COVID Collections Act for insights on pandemic loan collections, financial recovery, and legal compliance. Stay informed today!

Have you ever wondered how legislation shapes the financial landscape during critical times, especially when it involves something as impactful as the COVID-19 pandemic? The Complete COVID Collections Act is a pivotal piece of legislation designed to guide the financial recovery efforts initiated to support small businesses. As a seasoned Federal Debt Default lawyer at Protect Law Group, I, SBA Marc, provide a thorough breakdown of this act, revealing how it influences collections related to pandemic relief loans.

Explanation of the Act: Navigating the Complete COVID Collections Act with SBA Marc

Provisions of the Complete COVID Collections Act

The Complete COVID Collections Act is structured to address several key areas of concern for both lenders and borrowers involved in the COVID-19 pandemic relief efforts. Understanding these provisions is essential for financial stability and legal compliance.

Loan Collection During COVID-19

The act sternly prohibits the suspension of collections on certain loans. These are primarily those loans guaranteed under the Small Business Act during the pandemic. This provision ensures that small businesses remain accountable for their financial obligations while still aligning with the broader economic recovery goals. It helps in maintaining a steady cash flow to support businesses during these challenging times.

Referral of Claims

A significant stipulation within the act is the referral of claims to the Department of the Treasury for loans under $100,000. This process ensures that smaller loans don't slip through the cracks and that appropriate measures are taken to recover owed amounts. The role of the Department of the Treasury in this context is pivotal, as it provides a structured framework for addressing and processing such claims efficiently.

Monthly Updates

Transparency and accountability are cornerstones of the act. As such, the SBA Administrator has the duty to provide Congress with monthly briefings. These updates on the progress of loan collections and related activities offer a layer of oversight, ensuring that all stakeholders are informed and that expectations are managed effectively throughout the process.

Fraud Enforcement

Fraud is an inevitable risk in large-scale financial relief efforts. This act imposes a 10-year limit for filing criminal or civil actions related to fraud for any loan or grant made under COVID-19 relief programs. This limitation allows time for thorough investigations while ensuring that fraudulent activities are prosecuted, safeguarding the integrity of the relief programs.

Data Transparency

Data transparency is crucial for understanding the scope and success of recovery efforts. The act mandates that the Pandemic Response Accountability Committee provide real-time data regarding funds recovered by the Federal government from COVID-19 relief programs. This transparency is vital for policymakers, the public, and other stakeholders to assess the effectiveness of the relief measures and make informed decisions in the future.

Key Definitions

To navigate the Complete COVID Collections Act effectively, understanding its terminology is essential. Here are some key definitions:

Covered Loan

"Covered Loan" refers to loans guaranteed under specific sections of the Small Business Act, particularly those related to COVID-19 economic relief efforts. These loans include those provided under prominent programs like the Paycheck Protection Program (PPP), which were designed to support struggling businesses.

Covered Programs

The term "Covered Programs" encompasses a wide range of loan and grant programs established during the COVID-19 pandemic. This includes programs like the Paycheck Protection Program and grants designed to support shuttered venues and restaurants. Recognizing which loans and grants fall under this definition is crucial for applying the act’s provisions correctly.

Oversight and Reporting

Oversight and reporting structures are integral components of the Complete COVID Collections Act. They ensure that all activities related to loan collections are conducted with the highest levels of integrity and transparency.

Inspections and Reports

Coordination between the SBA and the Inspector General is a key focus of the act. By allowing for improved oversight, this relationship ensures accurate reporting of the use and recovery of COVID-19 relief funds. Regular inspections and reports are mechanisms by which compliance and efficacy are monitored, contributing to the financial health of participating entities.

Monthly Reports from Attorney General

The act requires the Attorney General to submit monthly reports to Congress detailing prosecution activities related to covered programs. These reports include metrics on enforcement actions, offering valuable insights into the legal and procedural aspects of managing the COVID-19 relief efforts.

Legislative Intent

The fundamental intent of the Complete COVID Collections Act revolves around maintaining financial accountability and ensuring efficient collections of loans provided to support small businesses during the pandemic. This intent aligns with the overarching goal of sustaining the COVID-19 recovery framework and promoting economic resilience.

Conclusion

In dissecting the Complete COVID Collections Act, we discover a complex, yet cohesive effort to reinforce financial discipline while supporting small businesses through recovery post-pandemic. Each provision, carefully crafted, fulfills the dual purpose of accountability and relief. As an advisor at Protect Law Group, understanding such legislation is critical for guiding businesses effectively, ensuring compliance, and fostering informed decision-making. This comprehensive understanding equips businesses and legal professionals alike to navigate these challenging times adeptly.

Frequently Asked Questions

$505,000 SBA 7A LOAN - FEDERAL DISTRICT COURT LITIGATION (CALIFORNIA)

$505,000 SBA 7A LOAN - FEDERAL DISTRICT COURT LITIGATION (CALIFORNIA)

Clients borrowed and personally guaranteed an SBA 7(a) loan.  Clients defaulted on the SBA loan and were sued in federal district court for breach of contract.  The SBA lender demanded the Client pledge several personal real estate properties as collateral to reinstate and secure the defaulted SBA loan.  We were subsequently hired to intervene and aggressively defend the lawsuit.  After several months of litigation, our attorneys negotiated a reinstatement of the SBA loan and a structured workout that did not involve any liens against the Client's personal real estate holdings.

$975,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT

$975,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT

Our firm successfully negotiated an SBA offer in compromise (SBA OIC), settling a $974,535.93 SBA loan balance for just $18,000. The offerors, personal guarantors on an SBA 7(a) loan, originally obtained financing to purchase a commercial building in Lancaster, California.

The borrower filed for bankruptcy, and the third-party lender (TPL) foreclosed on the property. Despite the loan default, the SBA pursued the offerors for repayment. Given their limited income, lack of significant assets, and approaching retirement, we presented a strong case demonstrating their financial hardship.

Through strategic negotiations, we secured a favorable SBA settlement, reducing the nearly $1 million debt to a fraction of the amount owed. This outcome allowed the offerors to resolve their liability without prolonged financial strain.

$1,500,000 SBA COVID-EIDL LOAN - SBA OHA LITIGATION

$1,500,000 SBA COVID-EIDL LOAN - SBA OHA LITIGATION

Small business and guarantors obtained an SBA COVID-EIDL loan for $1,000,000. Clients defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for collection. Treasury added nearly $500,000 in collection fees totaling $1,500,000. Clients were served with the SBA's Official 60-Day Notice and exercised the Repayment option by applying for the SBA’s Hardship Accommodation Plan. However, their application was summarily rejected by the SBA without providing any meaningful reasons. Clients hired the Firm to represent them against the SBA, Treasury and a Private Collection Agency.  After securing government records through discovery, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury. During litigation and before the OHA court issued a final Decision and Order, the Firm successfully negotiated a reinstatement and recall of the loan back to the SBA, a modification of the original repayment terms, termination of Treasury's enforced collection and removal of the statutory collection fees.

Read more Case Results