Impact Of The CARES Act On SBA Loan Defaults
Explore how the CARES Act has impacted SBA loan defaults and the implications for small businesses. Learn legal strategies for navigating these financial challenges.
Understand SBA loan default, its implications and how to tackle it, with the help of expert legal services offered by Protect Law Group in this insightful guide.
Perhaps you’re currently dealing with financial problems within your business and are fearing the prospect of defaulting on an SBA loan. Let’s take a thorough look at what this entails.
Protect Law Group primarily offers expert legal services that specialize in addressing your SBA and Treasury debt issues. Catering to small business owners and federal debtors throughout the United States, they provide a wide range of services to aid in resolving SBA loans and debt intricacies. These services include:
Protect Law Group attorneys have the permissions conferred by the Agency Practice Act to represent federal debtors across the country. Their jurisdictions cover the SBA, the SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service. The attorneys are responsible for conducting initial case evaluations and diagnosing your case issues. They also take up the role of educators explaining your options and help in implementing an effective plan designed to resolve your SBA loan problems.
These attorneys follow a strict ethical code and leverage cutting-edge technologies to provide you with relevant information about your case in a cost-effective manner.
Protect Law Group offers a variety of services related to SBA loans:
Their aim is to manage your SBA debt in such a way that it causes minimal harm to your business or personal asset base while also avoiding foreclosure, bankruptcy, and other negative outcomes of loan default.
Protect Law Group makes several offerings to their clients, including:
What sets Protect Law Group apart from others in the industry includes their team of educated attorneys who have mastered the six key principles necessary to resolve your SBA loan problems, and a customer experience that surpasses expectations.
If you borrow money from the Small Business Administration (SBA), the expectation is for you to repay the full amount. Failure to do so results in the SBA declaring your loan to be in default, which could potentially trigger severe repercussions such as foreclosure, bankruptcy, or seizure of personal assets.
So, if you are currently facing an SBA loan default or carrying a heavy burden of SBA debt, Protect Law Group can help. Don’t hesitate to reach out to them for a case evaluation. Remember, the first step towards resolving a problem is acknowledging its existence and seeking help.
Here are 10 relevant FAQs based on common search queries related to SBA loan defaults:
1. What happens if I default on my SBA loan?
When you default on an SBA loan, the lender may demand immediate payment, seize collateral, and the SBA may pursue legal action to recover the debt through personal assets.
2. How long before an SBA loan goes into default?
An SBA loan typically goes into default after 60 days of missed payments, though specific terms may vary by lender.
3. Can I negotiate an SBA loan default settlement?
Yes, borrowers can negotiate an “Offer in Compromise” with the SBA to settle the debt for less than the full amount owed.
4. Will SBA loan default affect my personal credit?
Yes, an SBA loan default will significantly impact your personal credit score since these loans typically require personal guarantees.
5. Can the SBA garnish wages for defaulted loans?
Yes, the SBA has the authority to garnish wages and can collect up to 15% of disposable income through Treasury Offset Program.
6. What assets can the SBA seize in a default?
The SBA can seize business assets, personal property, and bank accounts that were listed as collateral or covered under the personal guarantee.
7. How can I prevent SBA loan default?
Prevention strategies include maintaining open communication with lenders, requesting payment modifications, and seeking professional financial advice early.
8. Is bankruptcy an option for SBA loan default?
While bankruptcy is possible, SBA loans are typically more difficult to discharge than conventional loans, and personal guarantees may still apply.
9. Can I get another SBA loan after defaulting?
Generally, defaulting on an SBA loan makes you ineligible for future SBA loans unless the default is fully resolved.
10. What is an SBA Offer in Compromise (OIC)?
An OIC is a formal proposal to the SBA to settle the debt for less than the full amount owed, typically requiring proof of financial hardship.
Clients personally guaranteed SBA 504 loan balance of $750,000. Clients also pledged the business’s equipment/inventory and their home as additional collateral. Clients had agreed to a voluntary sale of their home to pay down the balance. We intervened and rejected the proposed home sale. Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.
Client personally guaranteed an SBA 7(a) loan to help with a relative’s new business venture. After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against his monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars. We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA). As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy) but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.
Clients obtained an SBA 7(a) loan for their small business in the amount of $298,000. They pledged their primary residence and personal guarantees as direct collateral for the loan. The business failed, the lender was paid the 7(a) guaranty money and the debt was assigned to the SBA. Clients received the Official 60-Day Notice giving them a couple of options to resolve the debt balance directly with the SBA before referral to Treasury's Bureau of Fiscal Service. The risk of referral to Treasury would add nearly $95,000 to the SBA principal loan balance. With the default interest rate at 7.5%, the amount of money to pay toward interest was projected at $198,600. Clients hired the Firm with only 4 days left to respond to the 60-Day due process notice. Because the clients were not eligible for an Offer in Compromise (OIC) due to the significant equity in their home and the SBA lien encumbering it, the Firm Attorneys proposed a Structured Workout to resolve the SBA debt. After back and forth negotiations, the SBA Loan Specialist assigned to the case approved the Workout terms which prevented potential foreclosure of their home, but also saved the clients approximately $294,000 over the agreed-upon Workout term with a waiver of all contractual and statutory administrative fees, collection costs, penalties, and interest.