We Provide Nationwide Representation of Small Business Owners, Personal Guarantors, and Federal Debtors with More Than $30,000 in Debt before the SBA and Treasury Department's Bureau of Fiscal Service
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Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure
Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements
Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.
Small business sole proprietor obtained an SBA COVID-EIDL loan for $500,000. Client defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for aggressive collection. Treasury added $180,000 in collection fees totaling $680,000+. Client tried to negotiate with Treasury but was only offered a 3-year or 10-year repayment plan. Client hired the Firm to represent before the SBA, Treasury and a Private Collection Agency. After securing government records through discovery and reviewing them, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury citing a host of purported violations. The Firm was able to negotiate a reinstatement and recall of the loan back to the SBA, participation in the Hardship Accommodation Plan, termination of Treasury's enforced collection and removal of the statutory collection fees.
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.
Clients personally guaranteed SBA 7(a) loan balance of over $300,000. Clients also pledged their homes as additional collateral. SBA OIC accepted $87,000 with the full lien release against the home.
Most SBA loans fall under two categories: 7(a) and 504.In an SBA 7(a) transaction, a loan is secured from a private sector lender and, provided that the lender and borrower have satisfied the requirements of the SBA, if the borrower defaults on the loan, the SBA will reimburse the lender for a percentage on the loan loss (usually 75% or 85%, depending on various factors).In an SBA 504 transaction, typically, a loan is secured from a private sector lender with a first position lien covering up to 50% of the project cost, and a second loan is secured from a private sector lender with a junior lien position covering up to 40% of the project cost, and the borrower makes a contribution of equity equal to at least 10% of the project cost. After the closing of the first and second loans, and provided that the lender and borrower have complied with the requirements of the SBA, a debenture is sold to investors, the proceeds of which pays off the second loan, whereupon the second loan is assigned to a Certified Development Company (“CDC”) and then to the SBA, which provides a 100% guarantee of the debenture.The existence of the SBA’s guarantee in each of these transactions is an inducement for the lender to make a loan on terms it would otherwise not make. However, the SBA guarantee does not allow the lender to disregard standard commercial underwriting principles such as collateral and personal guarantees. The SBA guarantee does allow the lender to loan more money, extend longer terms, and approve loans to less mature businesses than it otherwise would.The SBA’s purpose under these financing programs is to help businesses gain more access to capital, thereby creating jobs and expanding the tax base. Pursuant to the Small Business Jobs Act of 2010 (“2010 Act”), the maximum SBA guarantee to the lender on a 7(a) loan was increased to $5,000,000; and on a 504 Loan, the maximum debenture amount was increased to $5,000,000.
If the principal debtor used his/her primary residence as security for a loan to fund the small business, there are available loan modifications.
If as part of your SBA loan, you pledged your primary residence as collateral, neither Chapter 7 or Chapter 13 bankruptcy will likely help in the event of default. However, Chapter 11 Subchapter V may help.
For instance, a small business debtor's plan may modify the rights of a holder of a claim secured by the principal residence of the debtor if the new value received in connection with the granting of the security interest was:
Therefore, you could possibly use the Chapter 11 Subchapter V to save your house and modify the terms of repaying the loan if you pledged your house as collateral as part of your personal guarantee. You will, more than likely, not rid yourself of the lien. Preserving your home constitutes your goal with the new bankruptcy code. If you have no other options, you should explore the new bankruptcy option.
Yes, as long as you meet the criteria above individuals may avail themselves of Subchapter V.
Charge off is the process by which the SBA recognizes a loss and removes the uncollectible loan account from its active receivable accounts. The SBA’s policy is to be diligent and thorough in collection of federal debt and to promptly charge off all uncollectible accounts to more accurately reflect the status of the individual account and the Agency’s entire portfolio. It should be noted that a charge off is merely an administrative determination that does NOT affect SBA’s rights against any obligor nor reduce the SBA’s (or a participant lender’s) ability to proceed with any available remedy.
The SBA can compromise a debt (that is, it can accept less than the full amount owed on a debt) based on the authority contained in the following statutes and regulatory sources:a. Section 5(b) of the Small Business Act which gives the Administrator authority to effect compromise settlements.b. The Federal Claims Collection Act (31 U.S.C. 3701 and following) which provides a means for the settlement, adjustment, and compromise of claims by Federal agencies.c. 4 CFR § 183, which prescribes standards for the compromise of claims under the Federal Claims Collection Act.
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