Contact Our SBA Attorneys for Nationwide Representation of SBA and Treasury Debt Problems
Book a Consultation CallIf you recently received the 60-Day Official Notice from the SBA offering you the opportunity to petition for an administrative review of the debt, make an SBA Offer in Compromise or enter into a Repayment agreement for an SBA loan default, you may not know which way to turn. Not only has your SBA debt come back to haunt you but if you fail to respond to the 60-Day Official Notice within the stated time frame, your case will be cross-referred to the Department of Treasury’s Bureau of Fiscal Service, where the Government will add statutory collection fees up to 32% of the original SBA principal and interest balance.
An SBA Offer in Compromise is an out-of-court settlement option for a personal guarantor whose small business is about to shut down and there is no reasonable turnaround plan that can be executed to resurrect it from its current financial quandary. Furthermore, this remedial option is best utilized when it is apparent that the small business’s pledged collateral is insufficient to pay off the outstanding SBA loan balance and the personal assets of the owners are at stake due to the unconditional guarantees that were signed.
An SBA Offer in Compromise (OIC) is not possible without the cooperation of the responsible Borrowers and Guarantors. One of the basic elements of an SBA OIC is that the small business has ceased operations and all business assets have been liquidated. The small business owner’s assistance and help in maximizing the recovery on the business assets can help minimize the amount of deficiency balance on the SBA loan.
The amount offered for settlement must bear a reasonable relationship to the estimated value of the projected amount of recovery available through enforced collection. An SBA OIC is not available when the obligor has the financial ability to pay the deficiency in full within a reasonable time frame. An SBA OIC cannot be accepted if there is any evidence or knowledge of fraud, substantial misrepresentation, or financial dishonesty on the part of the offeror.
Each individual SBA OIC will be based on a case by case review of the Borrower’s or Guarantor’s individual financial situation and certain “litigative risks.” Factors to be considered are:
• An assessment of the debtor’s ability to pay and potential earnings capacity
• Health and life expectancy
• Local economic conditions
• Equity in pledged or reachable assets
• Settlement arrangements with other creditors
• Applicable exemptions available to debtor under State and Federal law
• The cost, time and risk of collection litigation
If you received the SBA’s 60-Day Official Notice providing you with an opportunity to submit an SBA OIC, don’t do it alone. Hire a qualified SBA Attorney to help your through this difficult and complex process.
Contact us today for a Case Evaluation.
An SBA Offer in Compromise (OIC) is not possible without the cooperation of the responsible Borrowers and Guarantors. One of the basic elements of an SBA OIC is that the small business has ceased operations and all business assets have been liquidated. The small business owner’s assistance and help in maximizing the recovery on the business assets can help minimize the amount of deficiency balance on the SBA loan.
The amount offered for settlement must bear a reasonable relationship to the estimated value of the projected amount of recovery available through enforced collection. An SBA OIC is not available when the obligor has the financial ability to pay the deficiency in full within a reasonable time frame. An SBA OIC cannot be accepted if there is any evidence or knowledge of fraud, substantial misrepresentation, or financial dishonesty on the part of the offeror.
Each individual SBA OIC will be based on a case by case review of the Borrower’s or Guarantor’s individual financial situation and certain “litigative risks.” Factors to be considered are:
• An assessment of the debtor’s ability to pay and potential earnings capacity
• Health and life expectancy
• Local economic conditions
• Equity in pledged or reachable assets
• Settlement arrangements with other creditors
• Applicable exemptions available to debtor under State and Federal law
• The cost, time and risk of collection litigation
If you received the SBA’s 60-Day Official Notice providing you with an opportunity to submit an SBA OIC, don’t do it alone. Hire a qualified SBA Attorney to help your through this difficult and complex process.
Contact us today for a Case Evaluation.
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.
Client’s small business obtained an SBA 7(a) loan for $150,000. He and his wife signed personal guarantees and pledged their home as collateral. The SBA loan went into default, the term or maturity date was accelerated and demand for payment of the entire amount claimed was made. The SBA lender’s note gave it the right to adjust the default interest rate from 7.25% to 18% per annum. The business filed for Chapter 11 bankruptcy but was dismissed after 3 years due to its inability to continue with payments under the plan. Clients wanted to file for Chapter 7 bankruptcy, which would have been a mistake as their home had significant equity to repay the SBA loan balance in full as the Trustee would likely seize and sell the home to repay the secured and unsecured creditors. However, the SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection to the SBA. Clients then received the SBA Official 60-Day Notice and hired the Firm to respond to it and negotiate on their behalf. Clients disputed the SBA’s alleged balance of $148,000, as several payments made to the SBA lender during the Chapter 11 reorganization were not accounted for. To challenge the SBA’s claimed debt balance, the Firm Attorneys initiated expedited discovery to obtain government records. SBA records disclosed the true amount owed was about $97,000. Moreover, because the Clients’ home had significant equity, they were not eligible for an Offer in Compromise or an immediate Release of Lien for Consideration, despite being incorrectly advised by non-attorney consulting companies that they were. Instead, our Firm Attorneys recommended a Workout of $97,000 spread over a lengthy term and a waiver of the applicable interest rate making the monthly payment affordable. After back and forth negotiations, SBA approved the Workout proposal, thereby saving the home from imminent foreclosure and reducing the Clients' liability by nearly $81,000 in incorrect principal balance, accrued interest, and 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.
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