Your Best Path to SBA Debt Relief: OIC vs. Negotiated Workout

When facing the default of an SBA loan, business owners often feel a profound sense of pressure and uncertainty. Understanding your options is the first step toward reclaiming financial stability and securing lasting business debt relief. For many, the path forward involves either an SBA Offer in Compromise (OIC) or a structured loan workout. As experienced SBA loan attorney professionals, we help you carefully evaluate your situation to choose the strategy that offers the best outcome for your specific SBA debt challenge.

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When facing the default of an SBA loan, business owners often feel a profound sense of pressure and uncertainty. Understanding your options is the first step toward reclaiming financial stability and securing lasting business debt relief. For many, the path forward involves either an SBA Offer in Compromise (OIC) or a structured loan workout. As experienced SBA loan attorney professionals, we help you carefully evaluate your situation to choose the strategy that offers the best outcome for your specific SBA debt challenge.

What is an SBA Offer in Compromise (OIC)?

An OIC is a formal settlement proposal where we ask the SBA to accept a reduced, lump-sum payment to satisfy the full debt. We typically use this option when the business has closed and the personal guarantor lacks the financial ability to repay the full amount. Our firm thoroughly prepares the complex financial package required to demonstrate a genuine inability to pay and maximize the potential debt reduction.

The Power of a Structured SBA Loan Workout

A negotiated loan workout is designed to make the existing SBA debt manageable for an ongoing business. This involves modifying the loan's terms, such as extending the maturity date, lowering the interest rate, or temporarily deferring payments. We often pursue this option for viable businesses that simply need breathing room due to temporary hardship. This preserves the business while providing crucial business debt relief.

The Attorney’s Role in Protecting Personal Guarantees

Nearly all SBA loans require a personal guarantee, making the debt a personal financial risk after a default. Our primary role as your SBA loan attorney is to minimize this personal liability, whether through an OIC or a workout. We provide comprehensive protection by defending against aggressive collection actions, including Treasury offsets, ensuring your family’s assets are safeguarded while resolving your SBA debt.

Choosing the Right Strategy for Your Financial Future

Selecting between an OIC and a workout is a case-by-case decision requiring deep knowledge of SBA regulations. An OIC may offer the highest percentage of business debt relief but requires a stringent financial disclosure and business closure. A workout focuses on business continuity. Our expertise lies in analyzing your unique circumstances to determine the most effective and aggressive legal path forward.

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If you are struggling with overwhelming SBA debt and need expert guidance, the time to act is now. At Protect Law Group, we have a proven track record of securing favorable outcomes for business owners nationwide. We specialize in navigating the complexities of the SBA and Treasury collection processes to achieve the debt resolution you deserve. Contact us today for a consultation to explore how our SBA loan attorney team can bring you peace of mind and genuine financial freedom.

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Frequently Asked Questions

Your Best Path to SBA Debt Relief: OIC vs. Negotiated Workout

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$212,000 SBA 7(a) LOAN – PERSONAL GUARANTY LIABILITY | NEGOTIATED 24% SETTLEMENT

Our firm successfully resolved an SBA 7(a) loan default in the amount of $212,000 on behalf of an individual guarantor. The borrower’s business experienced a significant downturn in revenue and was unable to sustain operations, ultimately leading to closure and a remaining personal guaranty obligation.

After conducting a thorough financial review and preparing a comprehensive SBA Offer in Compromise (SBA OIC) submission, we negotiated directly with the SBA and lender to achieve a settlement of $50,000—approximately 24% of the outstanding balance. This favorable resolution released the guarantor from further personal liability and provided the opportunity to move forward free from the burden of enforced collection.

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$383,000 SBA 7A LOAN - NEGOTIATED RELEASE OF LIEN FOR CONSIDERATION

Clients executed several trust deeds pledging seven (7) real estate properties and unconditional personal guarantees for an SBA 7(a) loan from the participating lender. The clients' small business failed and eventually defaulted on repayment of the loan exposing all collateral pledged by the clients. The SBA subsequently acquired the loan balance from the lender, including the right to liquidate and collect all pledged collateral pursuant to the trust deed instruments.

The Firm was hired to negotiate separate release of lien proposals for all 7 real estate properties. In preparation for the work assignment, the Firm Attorneys initiated discovery to secure records from the SBA and Treasury's Bureau of Fiscal Service. After reviewing the records and understanding the interplay between the lender and the SBA, the attorneys then prepared, submitted and negotiated the release of lien (ROL) for each of the 7 real estate properties for consideration.

After submitting the proposals, the assigned SBA Loan Specialists approved each ROL package - significantly reducing the total SBA debt claimed.

$750,000 SBA 504 LOAN - NEGOTIATED TERM REPAYMENT AGREEMENT

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.