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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$975,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT

Our firm successfully negotiated an SBA offer in compromise (SBA OIC), settling a $974,535.93 SBA loan balance for just $18,000. The offerors, personal guarantors on an SBA 7(a) loan, originally obtained financing to purchase a commercial building in Lancaster, California.

The borrower filed for bankruptcy, and the third-party lender (TPL) foreclosed on the property. Despite the loan default, the SBA pursued the offerors for repayment. Given their limited income, lack of significant assets, and approaching retirement, we presented a strong case demonstrating their financial hardship.

Through strategic negotiations, we secured a favorable SBA settlement, reducing the nearly $1 million debt to a fraction of the amount owed. This outcome allowed the offerors to resolve their liability without prolonged financial strain.

$150,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

The client personally guaranteed an SBA 7(a) loan for $150,000. His business revenue decreased significantly causing default and an accelerated balance of $143,000. The client received the SBA's Official 60-day notice with the debt scheduled for referral to the Treasury’s Bureau of Fiscal Service for aggressive collection in less than 26 days. We were hired to represent him, respond to the SBA's Official 60-day notice, and prevent enforced collection by the Treasury and the Department of Justice. We successfully negotiated a structured workout with an extended maturity date that included a reduction of the 14% interest rate and removal of substantial collection fees (30% of the loan balance), effectively saving the client over $242,000.

$391,000 SBA COVID EIDL - CROSS-SERVICING DISPUTE | NEGOTIATED REINSTATEMENT & WORKOUT

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.