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.
Client personally guaranteed an SBA 7(a) loan to help with a relative’s new business venture. After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against his monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars. We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA). As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy) but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.
Our firm successfully resolved an SBA 7(a) loan default in the amount of $140,000 on behalf of a husband-and-wife guarantor pair. The business had closed following a prolonged decline in revenue, leaving the borrowers personally liable for the remaining balance.
After conducting a comprehensive financial analysis and preparing a detailed SBA Offer in Compromise (SBA OIC) package, we negotiated directly with the SBA and the lender to achieve a settlement for $70,000 — just 50% of the outstanding balance. This settlement released the borrowers from further personal liability and allowed them to move forward without the threat of enforced collection.
Clients executed personal and corporate guarantees for an SBA 7(a) loan from a Preferred Lender Provider (PLP). The borrower corporation defaulted on the loan exposing all collateral pledged by the Clients. The SBA subsequently acquired the loan balance from the PLP, including the right to collect against all guarantors. The SBA sent the Official Pre-Referral Notice to the guarantors giving them sixty (60) days to either pay the outstanding balance in full, negotiate a Repayment (Offer in Compromise (OIC) or Structured Workout (SW)), challenge their alleged guarantor liability or file a Request for Hearing (Appeals Petition) with the SBA Office of Hearings & Appeals.
Because the Clients were not financially eligible for an OIC, they opted for Structured Workout negotiations directly with the SBA before the debt was transferred to the Bureau of Fiscal Service, a division of the U.S. Department of Treasury for enforced collection.
The Firm was hired to negotiate a global Workout Agreement directly with the SBA to resolve the personal and corporate guarantees. After submitting the Structured Workout proposal, the assigned SBA Loan Specialist approved the requested terms in under ten (10) days without any lengthy back and forth negotiations.
The favorable terms of the Workout included an extended maturity at an affordable principal amount, along with a significantly reduced interest rate saving the Clients approximately $181,000 in administrative fees, penalties and interest (contract interest rate and Current Value of Funds Rate (CVFR)) as authorized by 31 U.S.C. § 3717(e) had the SBA loan been transferred to BFS.
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