Explore the factors influencing SBA's decision on your Offer in Compromise. Learn how to improve your chances of acceptance and manage your defaulted loan effectively.
If you're dealing with a defaulted SBA loan and exploring your options, you might be considering an Offer in Compromise (OIC). This process allows you to propose settling your debt for less than the full amount owed. However, whether the SBA accepts your offer depends on several factors. Protect Law Group, a law firm specializing in SBA loan issues, can guide you through this complex process and help improve your chances of success.
An Offer in Compromise is a proposal to repay a portion of your debt instead of the full amount. This can provide relief if you're struggling financially. The SBA views OICs as a way to recover some funds while offering borrowers a chance to resolve their debts.
Business ventures can fail for various reasons, leaving debt behind. While bankruptcy is an option, it often carries long-term consequences. An OIC offers an alternative that may help you manage your debt without the stigma of bankruptcy. Protect Law Group can help you evaluate whether this is the right path for you.
The SBA evaluates several factors when deciding whether to accept an OIC. These include:
The SBA aims to achieve a resolution that is more financially advantageous than enforced collection actions. Lump sum payments are often preferred as they provide immediate returns with less risk and cost.
To increase the likelihood of acceptance, consider the following steps:
Conduct a thorough review of your finances, including income, expenses, assets, and liabilities. Protect Law Group can assist in organizing this information to strengthen your proposal.
Your offer should reflect your genuine ability to pay. Unrealistic proposals can harm your credibility. Protect Law Group can help you strike the right balance.
Professional advice is invaluable. Protect Law Group’s experienced SBA attorneys can guide you through the process, ensuring your documentation and negotiation strategies are effective.
Provide detailed explanations for your financial struggles, supported by documentation. This strengthens your case and demonstrates sincerity.
Submitting an OIC requires precision and thoroughness. Protect Law Group can help ensure your submission is complete and accurate.
Most OIC submissions involve completing SBA Form 1150, which requires detailed financial information. Accuracy is crucial to avoid delays or rejections.
Include a cover letter summarizing your situation and key points of your OIC. This personalizes your submission and provides context beyond the numbers.
After submission, the SBA will review your OIC. Possible outcomes include:
If accepted, you can move forward without the burden of overwhelming debt. Protect Law Group can help you adhere to the terms of the agreement.
The SBA may propose a counteroffer. Being prepared to negotiate is essential.
If rejected, understanding the reasons is critical. Protect Law Group can help you reassess and potentially resubmit a revised offer.
Adhere strictly to the terms of the agreement to avoid defaulting on the new arrangement.
Rejection doesn’t mean the end. Protect Law Group can help you explore other options, including negotiation or, if necessary, bankruptcy.
Whether the SBA accepts your OIC depends on many factors. Protect Law Group’s expertise in SBA loan issues can help you navigate this complex process, increasing your chances of a favorable outcome. Contact them at (833) 428-0937 for a case evaluation and personalized guidance toward financial recovery.
Are you struggling with a defaulted SBA loan and wondering if the SBA will accept your Offer in Compromise? The process can be complex, but with the right guidance, you can increase your chances of success. Protect Law Group specializes in helping individuals and businesses navigate SBA loan challenges, including Offers in Compromise. Their experienced SBA attorneys and Federal Agency Practitioners provide tailored solutions to help you resolve your debt effectively. Contact Protect Law Group today at (833) 428-0937 for a case evaluation and take the first step toward financial relief.
An SBA Offer in Compromise (OIC) is a proposal to settle your SBA loan debt for less than the full amount owed. It is designed for borrowers facing financial hardship who are unable to meet their loan obligations fully. The SBA considers OICs as a way to recover some funds while providing relief to borrowers.
An Offer in Compromise can be a viable alternative to bankruptcy, which often carries long-term repercussions and stigma. By pursuing an OIC, you may be able to manage your debt more effectively and avoid the negative consequences associated with filing for bankruptcy.
The SBA evaluates several factors, including the handler of your file, your cooperation with the lender, the presence of liquid assets, the amount of deficiency balance, the potential for bankruptcy, your net worth and assets, wage garnishment yield, special circumstances like health issues, and the cost of collection. These factors help determine whether your offer is acceptable.
To increase your chances, evaluate your financial situation thoroughly, set a realistic offer based on your ability to pay, consult with experts like attorneys or financial advisors, and provide detailed documentation explaining your financial struggles. Submitting accurate and complete forms, such as SBA Form 1150, is also crucial.
If your OIC is rejected, it is important to understand the reasons behind the decision. You can reassess your financial situation, address any deficiencies in your submission, and potentially resubmit a revised offer. Consulting a professional may also help you explore other options, such as negotiation or bankruptcy as a last resort.
The SBA may accept your offer, providing relief and closure to your debt situation. Alternatively, they might propose a counteroffer with adjusted terms or amounts. If your offer is rejected, you can use the feedback to revise and resubmit your proposal or explore other debt resolution options.
Clients obtained an SBA 7(a) loan for $324,000 to buy a small business and its facility. The business and real estate had an appraisal value of $318,000 at the time of purchase. The business ultimately failed but the participating lender abandoned the business equipment and real estate collateral even though it had valid security liens. As a result, the lender recouped nearly nothing from the pledged collateral, leaving the business owners liable for the deficiency balance. The SBA paid the lender the 7(a) guaranty money and was assigned ownership of the debt, including the right to collect. However, the clients never received the SBA Official 60-Day Notice and were denied the opportunity to negotiate an Offer in Compromise (OIC) or a Workout directly with the SBA before being transferred to Treasury's Bureau of Fiscal Service, which added an additional $80,000 in collection fees. Treasury garnished and offset the clients' wages, federal salary and social security benefits. When the clients tried to negotiate with Treasury by themselves, they were offered an unaffordable repayment plan which would have caused severe financial hardship. Clients subsequently hired the Firm to litigate an Appeals Petition before the SBA Office & Hearings Appeals (OHA) challenging the legal enforceability and amount of the debt. The Firm successfully negotiated a term OIC that was approved by the SBA Office of General Counsel, saving the clients approximately $205,000.
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.
Our firm successfully facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) f borrower received an SBA disaster loan of $150,000, but due to the severe economic impact of the COVID-19 pandemic, the business was unable to recover.
Despite the borrower’s efforts to maintain operations, shutdowns and restrictions significantly reduced the customer base and revenue, making continued operations unsustainable. After a thorough business closure review, we negotiated with the SBA, securing a resolution where the borrower paid only $6,015 to release the collateral, with no further financial liability for the owner/officer.
This case demonstrates how businesses affected by the pandemic can navigate SBA loan settlements effectively. If your business is struggling with an SBA EIDL loan, we specialize in SBA Offer in Compromise (SBA OIC) solutions to help close outstanding debts while minimizing financial burden.
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