SBA Loan Default - Can I Modify My Note?
We help people who need to avoid an SBA loan default by advising them about the SBA offer in compromise and about other various SBA loan problems.
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.
Our firm successfully resolved an SBA 7(a) loan default in the amount of $212,000 on behalf of an individual guarantor. The borrower’s business experienced a significant downturn in revenue and was unable to sustain operations, ultimately leading to closure and a remaining personal guaranty obligation.
After conducting a thorough financial review and preparing a comprehensive SBA Offer in Compromise (SBA OIC) submission, we negotiated directly with the SBA and lender to achieve a settlement of $50,000—approximately 24% of the outstanding balance. This favorable resolution released the guarantor from further personal liability and provided the opportunity to move forward free from the burden of enforced collection.
Our firm successfully resolved an SBA 7a loan in the original amount of $364,000 for a New Jersey-based borrower. The client filed Chapter 7 bankruptcy but the mortgage on his real estate securing the loan remained in place. The available equity amounted to $263,470 and the deficiency equaled $317,886.
We gathered the pertinent documentation and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the mortgage for $80,000.
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.
.jpg)
