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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Frequently Asked Questions

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

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$154,000 SBA COVID-19 EIDL - AUDIT REPRESENTATION & RELEASE OF COLLATERAL

Our firm successfully assisted a client in closing an SBA Disaster Loan tied to a COVID-19 Economic Injury Disaster Loan (EIDL). The borrower obtained an EIDL loan of $153,800, but due to the prolonged economic impact of the COVID-19 pandemic, the business was unable to recover and ultimately closed.

As part of the business closure review and audit, we worked closely with the SBA to negotiate a resolution. The borrower was required to pay only $1,625 to release the remaining collateral, effectively closing the matter without further financial liability for the owner/officer.

This case highlights the importance of strategic negotiations when dealing with SBA settlements, particularly for businesses that have shut down due to unforeseen economic challenges. If you or your business are struggling with SBA loan debt, we focus on SBA Offer in Compromise (SBA OIC) solutions to help settle outstanding obligations efficiently.

$58,000 SBA 7A LOAN - AWG HEARING DEFENSE

Client personally guaranteed SBA 7(a) loan balance of $58,000. The client received a notice of Intent to initiate Administrative Wage Garnishment (AWG) Proceedings. We represented the client at the hearing and successfully defeated the AWG Order based on several legal and equitable grounds.

$1,500,000 SBA COVID-EIDL LOAN - SBA OHA LITIGATION

Small business and guarantors obtained an SBA COVID-EIDL loan for $1,000,000. Clients defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for collection. Treasury added nearly $500,000 in collection fees totaling $1,500,000. Clients were served with the SBA's Official 60-Day Notice and exercised the Repayment option by applying for the SBA’s Hardship Accommodation Plan. However, their application was summarily rejected by the SBA without providing any meaningful reasons. Clients hired the Firm to represent them against the SBA, Treasury and a Private Collection Agency. After securing government records through discovery, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury. During litigation and before the OHA court issued a final Decision and Order, the Firm successfully negotiated a reinstatement and recall of the loan back to the SBA, a modification of the original repayment terms, termination of Treasury's enforced collection and removal of the statutory collection fees.

What is an SBA Offer in Compromise (OIC)?

The Power of a Structured SBA Loan Workout

The Attorney’s Role in Protecting Personal Guarantees

Choosing the Right Strategy for Your Financial Future

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