SBA Loan Default Attorneys: Understanding the Collection Process
Navigate SBA loan defaults with confidence. Discover how SBA loan default attorneys can guide you through collections and safeguard your financial future efficiently.
Learn to navigate the complex legal and financial challenges of selling your business after an SBA loan default. Expert tips to manage risks and secure favorable outcomes.
Have you ever wondered what steps to take after defaulting on a Small Business Administration (SBA) loan, especially when considering selling your business assets? This is a common concern for many business owners. While the answer might seem straightforward, navigating the legal and financial complexities requires careful planning and expert guidance.
A security interest is a legal right granted to the lender over your business property, typically used as collateral. This agreement ensures the lender can seize the collateral if you default on the loan, minimizing their financial risk.
When closing an SBA loan, lenders often file a UCC-1 financing statement, placing a blanket lien on your business assets. This document publicly declares the lender's right to seize and sell assets to recover the debt. Before selling any pledged assets, you must repay the loan or obtain explicit permission from the lender.
Before proceeding, consult with your attorney. They may recommend drafting a non-binding Letter of Intent (LOI) to present to your lender. This document outlines your intentions and allows the lender to evaluate the offer before approving the sale.
Never sign a sales contract without your attorney's review. Most sales require a "condition precedent," which is written consent from the lender approving the sale terms, including prices and asset lists. This ensures all parties are aligned and avoids future disputes.
If your offer is rejected, consult your attorney to reassess your options. Without lender approval, the lien remains, preventing you from providing a clear title to the buyer.
Buyers often require assurances that assets are free of liens. Achieving this depends on successful negotiations with the lender, emphasizing the importance of a strategic approach.
Selling assets without lender approval can lead to lawsuits or even criminal charges. Always act in compliance with legal requirements to avoid severe repercussions.
Engage experienced legal professionals to review offers and guide you through the process. Their expertise ensures compliance with regulations and protects your interests.
Maintain open communication with your lender. Transparency about your financial situation and intentions demonstrates responsibility and fosters cooperation.
Work with your attorney to draft a consent agreement that satisfies both your needs and the lender's interests, facilitating a smooth sale process.
Review your loan documents with your attorney to understand all constraints and obligations. This ensures you are fully prepared for negotiations.
Disputes may arise despite careful planning. Maintain detailed records and prepare for potential challenges to save time and resources.
Protect Law Group specializes in assisting individuals and businesses facing SBA loan challenges. Their experienced attorneys provide tailored solutions to navigate legal and financial complexities. By prioritizing informed decision-making and seeking expert guidance, you can streamline the process, mitigate risks, and achieve favorable outcomes. Contact Protect Law Group at (833) 428-0937 for a case evaluation and personalized support.
Facing the challenges of selling your business after an SBA loan default can feel overwhelming, but you don’t have to navigate this journey alone. Protect Law Group specializes in providing tailored legal and financial solutions to individuals dealing with SBA loan issues. With a team of experienced SBA attorneys and Federal Agency Practitioners, we are here to help you understand your options, negotiate with lenders, and ensure compliance with all legal requirements. Contact us today at (833) 428-0937 for a case evaluation and take the first step toward resolving your SBA loan challenges with confidence.
A security interest is a legal right granted by the borrower to the lender, allowing the lender to claim the borrower's business property as collateral. This ensures the lender has a way to recover their investment if the borrower defaults on the loan. The lender can seize and sell the collateral to minimize their risk.
When closing an SBA loan, lenders typically place a blanket lien on your business assets. This lien is made effective through a UCC-1 financing statement, which publicly declares the lender's right to seize and sell the assets if you default. To sell any pledged assets, you must either repay the loan or obtain explicit permission from the lender.
If you have a buyer, consult your attorney first. Your attorney may recommend drafting a non-binding Letter of Intent (LOI) to present to the lender. This document outlines your intentions and helps the lender evaluate the offer. Do not sign any sales contract without your attorney's review and the lender's written consent, as this ensures all parties are aligned and avoids future disputes.
If the lender rejects your offer, consult your attorney to reassess your options. Without lender approval, the lien on your assets remains, preventing you from transferring a clear title to the buyer. Negotiating with the lender is essential to meet their requirements and satisfy the buyer's expectations for lien-free assets.
Selling assets without lender approval can lead to severe consequences, including lawsuits from the buyer, lender, or SBA. In some cases, unauthorized sales may be considered fraudulent or deceptive, potentially resulting in criminal charges. Always ensure compliance with legal and financial obligations before proceeding with a sale.
Maintain open and transparent communication with your lender. Clearly explain your financial situation and the reasons for selling the assets. Work with your legal advisor to negotiate a consent agreement that satisfies the lender's interests while enabling you to move forward with the sale. Building a collaborative relationship with the lender is key to navigating this process successfully.
Client personally guaranteed SBA 7(a) loan balance of over $150,000. Business failed and eventually shut down. SBA then pursued client for the balance. We intervened and was able to present an SBA OIC that was accepted for $30,000.
Client received the SBA's Official 60-Day Notice for a loan that was obtained by her small business in 2001. The SBA loan went into default in 2004 but after hearing nothing from the SBA lender or the SBA for 20 years, out of the blue, she received the SBA's collection due process notice which provided her with only one of four options: (1) repay the entire accelerated balance immediately; (2) negotiate a repayment arrangement; (3) challenge the legal enforceability of the debt with evidence; or (4) request an OHA hearing before a U.S. Administrative Law Judge.
Client hired the Firm to represent her with only 13 days left before the expiration deadline to respond to the SBA's Official 60-Day Notice. The Firm attorneys immediately researched the SBA's Official loan database to obtain information regarding the 7(a) loan. Thereafter, the Firm attorneys conducted legal research and asserted certain affirmative defenses challenging the legal enforceability of the debt. A written response was timely filed to the 60-Day Notice with the SBA subsequently agreeing with the client's affirmative defenses and legal arguments. As a result, the SBA rendered a decision immediately terminating collection of the debt against the client's alleged personal guarantee liability saving her $50,000.
The client personally guaranteed an SBA 7(a) loan for $150,000. His business revenue decreased significantly causing default and an accelerated balance of $143,000. The client received the SBA's Official 60-day notice with the debt scheduled for referral to the Treasury’s Bureau of Fiscal Service for aggressive collection in less than 26 days. We were hired to represent him, respond to the SBA's Official 60-day notice, and prevent enforced collection by the Treasury and the Department of Justice. We successfully negotiated a structured workout with an extended maturity date that included a reduction of the 14% interest rate and removal of substantial collection fees (30% of the loan balance), effectively saving the client over $242,000.