Discover if defaulting on an SBA loan can jeopardize your home. Understand SBA liens, foreclosure risks, and negotiation options to safeguard your property.
Have you ever considered what happens if you default on an SBA loan secured by a lien on your home? This is a concern that can cause sleepless nights, especially if your home is collateral for a Small Business Administration (SBA) loan. At Protect Law Group, we specialize in helping individuals understand and navigate the complexities of SBA liens. Let’s explore how SBA liens work and what factors influence the risk of losing your home in case of default.
An SBA lien is a legal claim placed by the Small Business Administration or its lender on your property, often your home, as collateral for a business loan. This lien is part of the loan agreement, ensuring the lender has a way to recover losses if the loan defaults. Understanding the implications of this lien is crucial for managing your financial obligations effectively.
SBA liens are significant because they impact your ownership and equity in your home. When a lien is placed, your rights to the property are tied to the satisfaction of the debt. At Protect Law Group, we help clients understand these terms and develop strategies to manage their obligations effectively.
Defaulting on an SBA loan secured by your home could put your property at risk of foreclosure. However, the outcome depends on various factors, including existing mortgages, home equity, and negotiations with the lender. Our experienced attorneys can guide you through these complexities to protect your interests.
Home equity is the difference between your home’s market value and the total of your mortgages and liens. For example, if your home is valued at $225,000 and you owe $175,000 across two mortgages, your equity is $50,000. High equity increases foreclosure risk, but our team can help you navigate these challenges.
Example Table: Home Equity Calculation
Description Amount Home Value $225,000 Mortgage 1 $100,000 Mortgage 2 $75,000 Equity $50,000
If you’re facing financial distress, you may wonder if it’s possible to negotiate with the SBA lender to release your home as collateral. The answer is yes, but it requires careful planning. Protect Law Group specializes in guiding clients through these negotiations to achieve favorable outcomes.
An Offer in Compromise allows you to propose a settlement to reduce your liability under the personal guarantee. This can include releasing the lien on your home. Our attorneys ensure that your offer resolves the total debt to avoid future legal complications, such as judgment liens.
Dealing with SBA liens and related negotiations can be complex. At Protect Law Group, our experienced attorneys and Federal Agency Practitioners provide personalized support to help you navigate these challenges. We assist in crafting comprehensive Offers in Compromise and exploring strategic settlement options to protect your home and financial future.
Understanding SBA liens and their implications is essential for safeguarding your home and planning your financial future. While defaulting on an SBA loan can pose risks, factors like existing mortgages, home equity, and negotiation strategies play a crucial role. At Protect Law Group, we are committed to helping clients achieve manageable solutions and peace of mind. Contact us today for a case evaluation and let us help you navigate the complexities of SBA liens.
Are you worried about the risk of losing your home due to an SBA loan default? Protect Law Group specializes in helping individuals navigate the complexities of SBA liens and related financial challenges. Our experienced SBA attorneys and Federal Agency Practitioners provide tailored solutions to safeguard your assets and achieve peace of mind. Contact us today at (833) 428-0937 for a case evaluation and take the first step toward resolving your SBA loan concerns effectively.
An SBA lien is a legal claim by the Small Business Administration or its lender on your property, typically your home, as collateral for a business loan. This lien is part of the loan agreement to secure the loan in case of default. If the business fails to make payments, the SBA or lender may take possession of the collateral to recover losses.
Yes, defaulting on an SBA loan secured by your home could put your home at risk of foreclosure. However, the likelihood depends on factors such as existing mortgages, home equity, and negotiations with the lender. Foreclosure is not always a straightforward outcome.
If you have a first mortgage on your home that precedes the SBA lien, it takes priority in foreclosure proceedings. The first mortgage must be fully settled before the SBA lender receives any proceeds, making foreclosure less appealing if the SBA lien is secondary.
Home equity, the difference between your home’s market value and the remaining balance on your mortgages, influences foreclosure risk. High equity makes foreclosure more attractive to lenders, while low or zero equity reduces the likelihood of foreclosure.
Yes, you can negotiate with the SBA lender to release your home as collateral, often through an Offer in Compromise. This involves proposing a settlement to reduce your obligation. However, it is essential to handle this carefully to avoid legal challenges or future judgment liens.
Yes, engaging an attorney or CPA familiar with SBA regulations and lien resolutions is highly recommended. They can guide you through settlement options, help craft an Offer in Compromise, and improve your chances of achieving a favorable outcome.
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.
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.
Our firm successfully resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) in the original amount of $150,000 for a Florida-based borrower. The loan, issued on June 4, 2020, was secured by business assets and potential personal liability through the SBA's Security Agreement.
Following the permanent closure of the business, we guided the client through the SBA’s Business Closure Review process and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the business collateral for $2,910 — satisfying the borrower’s obligations under the Security Agreement and eliminating any further enforcement risk against the pledged assets.
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