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SBA Default Assistance Programs

Discover SBA Default Assistance Programs to effectively manage loan defaults. Learn about solutions like offers in compromise, structured workouts, and legal support.

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Are you facing the challenges of a Small Business Administration (SBA) loan default and wondering what assistance programs are available to help you navigate these troubled waters? Dealing with a default can be overwhelming and stressful, but understanding the support options provided by the SBA can significantly ease the burden. SBA Default Assistance Programs are specifically designed to help individuals and businesses manage and resolve their debt issues effectively. In this article, we will explore various programs and legal avenues available, with professional insights into how Protect Law Group can assist in resolving your SBA debt challenges.

Understanding SBA Loan Defaults

When a small business struggles to meet its financial obligations to the SBA, a loan default may occur. This situation can arise due to various factors, including cash flow problems, unexpected expenses, or inadequate revenue generation. Understanding the implications of an SBA loan default is crucial for making informed decisions and seeking appropriate assistance.

What Happens When You Default on an SBA Loan?

Once a default occurs, several processes can be initiated by the SBA or the lending institution. These may include demands for repayment, collection actions, and potential legal proceedings. Knowing the steps involved can help you prepare for potential outcomes and explore available solutions.

SBA Default Assistance Programs

To aid those facing loan defaults, the SBA offers several assistance programs aimed at resolving debts while minimizing negative consequences. These programs are designed to provide support, negotiation leverage, and a pathway to financial recovery.

SBA Offer in Compromise (OIC)

The SBA Offer in Compromise program allows eligible business owners to settle their debts for less than the total amount owed. This option can be particularly beneficial for businesses facing financial hardship. Engaging professional assistance, such as legal advisors from Protect Law Group, can be crucial in preparing a compelling offer that addresses the SBA’s requirements.

How Does the Offer in Compromise Work?

The OIC involves negotiations with the SBA to accept a reduced payment in full settlement of the debt. It requires a demonstration of inability to pay the full amount, backed by financial documentation. A successful offer can lead to significant debt relief.

Structured Workout Program

The Structured Workout Program is a negotiated agreement between the SBA and borrowers that allows debt repayment over an extended period. This plan can provide breathing room to manage finances and gradually settle the outstanding amount.

Steps to Engage in a Structured Workout

  1. Assessment: Evaluate financial capabilities and prepare an appropriate repayment plan.
  2. Negotiation: Work with SBA representatives to agree on favorable terms.
  3. Implementation: Adhere to the agreed schedule to prevent further complications.

Legal Support in Resolving SBA Debt

Legal support plays a critical role in navigating the complexities of SBA default assistance. Protect Law Group specializes in offering comprehensive legal services for borrowers, ensuring each case is approached with expertise and strategic thinking.

Protect Law Group’s Legal Expertise

Protect Law Group offers a wide range of legal services tailored to address SBA and Treasury debt issues. Their attorneys are proficient in federal debtor representation, providing solutions to defend and potentially resolve SBA debt collection matters.

Core Services Offered by Protect Law Group

  • Developing Defense Strategies: Crafting proactive strategies to manage SBA debt and mitigate potential repercussions.
  • Appeals Processes: Assisting with filing Appeals Petitions with the SBA Office of Hearings and Appeals.
  • Error Investigation: Identifying procedural and legal errors in debt collection practices for effective defense.

Administrative Litigation

When disputes escalate to litigation, having skilled attorneys can be pivotal. Protect Law Group represents clients in administrative litigation before the SBA Office of Hearings and Appeals, ensuring clients’ rights and interests are safeguarded.

Navigating Administrative Litigation

Legal representation in administrative litigation involves reviewing case specifics, challenging procedural errors, and advocating for fair treatment.

The Role of Negotiations

Effective negotiations can lead to favorable terms and potential debt reduction. Protect Law Group employs expert negotiators to interact with the SBA and lenders, exploring the best possible outcomes for clients.

Cross-Servicing Disputes

When SBA debts are transferred to the Treasury’s Bureau of Fiscal Service, resolving cross-servicing disputes becomes essential. Protect Law Group assists in formally preparing Petitions for Cross-Servicing Disputes, aiming to resolve these issues effectively.

Steps to Address Cross-Servicing Disputes

  • Prepare Documentation: Gather necessary evidence and documentation to support the dispute.
  • Submit Petition: Formally submit a petition outlining the dispute and potential resolutions.
  • Engage in Dialogue: Communicate with relevant authorities to seek a mutually beneficial outcome.

Why Choose Protect Law Group?

Selecting the right legal firm is crucial for successfully navigating SBA debt problems, and Protect Law Group stands out for several reasons:

Unique Benefits Offered by Protect Law Group

  • Expertise in SBA Debt Resolution: A proven track record of resolving millions in SBA debts via OIC and negotiated agreements.
  • Unmatched Customer Experience: Customer-centric approach ensuring a smooth and supportive process during challenging times.
  • Cutting-Edge Technology: Utilization of advanced technologies for efficient and effective communication and case management.

How Protect Law Group Differentiates Itself

Protect Law Group distinguishes itself by offering highly educated attorneys who are well-versed in core principles for resolving SBA loan problems. This depth of knowledge and experience results in personalized solutions catered to each client’s unique circumstances.

Final Thoughts

Facing SBA loan default challenges requires informed decision-making and professional support. Understanding the available SBA Default Assistance Programs and seeking expert legal advice are crucial steps towards resolution. Protect Law Group stands ready to provide guidance, helping you explore and implement effective strategies to navigate these financial challenges successfully.

By leveraging their expertise, you can work towards minimizing the impact of debt issues and regaining fiscal stability, whether through negotiated settlements, structured workouts, or legal representation. If you’re encountering difficulties managing your SBA debt, consider reaching out to Protect Law Group for a comprehensive evaluation and the peace of mind needed during this complicated time.

Frequently Asked Questions

$150,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

$150,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

Client’s small business obtained an SBA 7(a) loan for $150,000.  He and his wife signed personal guarantees and pledged their home as collateral. The SBA loan went into default, the term or maturity date was accelerated and demand for payment of the entire amount claimed was made.  The SBA lender’s note gave it the right to adjust the default interest rate from 7.25% to 18% per annum. The business filed for Chapter 11 bankruptcy but was dismissed after 3 years due to its inability to continue with payments under the plan. Clients wanted to file for Chapter 7 bankruptcy, which would have been a mistake as their home had significant equity to repay the SBA loan balance in full as the Trustee would likely seize and sell the home to repay the secured and unsecured creditors. However, the SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection to the SBA. Clients then received the SBA Official 60-Day Notice and hired the Firm to respond to it and negotiate on their behalf. Clients disputed the SBA’s alleged balance of $148,000, as several payments made to the SBA lender during the Chapter 11 reorganization were not accounted for. To challenge the SBA’s claimed debt balance, the Firm Attorneys initiated expedited discovery to obtain government records. SBA records disclosed the true amount owed was about $97,000. Moreover, because the Clients’ home had significant equity, they were not eligible for an Offer in Compromise or an immediate Release of Lien for Consideration, despite being incorrectly advised by non-attorney consulting companies that they were. Instead, our Firm Attorneys recommended a Workout of $97,000 spread over a lengthy term and a waiver of the applicable interest rate making the monthly payment affordable. After back and forth negotiations, SBA approved the Workout proposal, thereby saving the home from imminent foreclosure and reducing the Clients' liability by nearly $81,000 in incorrect principal balance, accrued interest, and statutory collection fees.

$58,000 SBA 7A LOAN - AWG HEARING DEFENSE

$58,000 SBA 7A LOAN - AWG HEARING DEFENSE

Client personally guaranteed SBA 7(a) loan balance of $58,000.  The client received a notice of Intent to initiate Administrative Wage Garnishment (AWG) Proceedings.  We represented the client at the hearing and successfully defeated the AWG Order based on several legal and equitable grounds.

$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.

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