SBA Loan Default: You Pledged Your Personal Residence, Now What?
We will analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise for your SBA loan default.
Contact Our SBA Attorneys for Nationwide Representation of SBA and Treasury Debt Problems
Book a Consultation CallAs a leading law firm in the field of SBA and Treasury debt collection cases, Protect Law Group offers top-notch litigation and negotiation services before the SBA Office of Hearings and Appeals (OHA). Our SBA OHA attorneys are well-versed in the complex federal laws and regulations surrounding these matters and have extensive experience representing clients throughout the United States. Whether you are located on the West Coast, Southwest, Mountain West, Midwest, Great Plains, East Coast, Northeast, Appalachia, the South, Alaska or Hawaii, our SBA OHA attorneys, who are authorized by the Agency Practice Act (5 U.S.C. § 500), can represent your interests against the U.S. Small Business Administration and their team of Trial Attorneys from the Office of General Counsel. Contact us today if you need assistance challenging an SBA Program Decision before the SBA OHA.
We prosecute SBA Debt Collection cases involving SBA 7(a), 504, COVID (PPP, EIDL), and 7(b) Disaster loans. Our SBA OHA Attorneys can appeal certain SBA debt collection cases and property deprivation issues through litigation. Our SBA OHA Attorneys can evaluate the facts of your case, research legal issues, assess the prospects of resolution and, if applicable, prepare an Appeals Petition in response to proposed administrative offsets against federal benefits (such as Social Security Income or Disability), federal salary offsets, federal contractor pay, military salary, pension and annuity pay offsets. Be advised that an Appeals Petition is accepted at the sole discretion of the SBA OHA and the presiding United States Administrative Law Judge (ALJ).
The Office of Hearings and Appeals (OHA) is an independent office of the Small Business Administration (SBA) established in 1983 to provide a quasi-judicial appeal of eligible SBA Program Decisions. The SBA OHA has jurisdiction to conduct proceedings in the collection of debts owed to the SBA and the United States under the Debt Collection Act of 1982, the Debt Collection Improvement Act of 1996, and 13 C.F.R. Part 140. The SBA OHA is on the Eighth Floor of SBA headquarters above the Federal Center SW Metro Stop. Their address is 409 Third Street, SW, Eighth Floor, Washington, DC 20416.
Aggressive collection of SBA debts has increased considerably in recent years. Understanding the SBA OHA appeals process requires experienced SBA OHA Appeal Attorneys who know and understand government contracts, federal regulations, including the nuances that may arise if the SBA tries to deprive your property without due process of law. You have the right to challenge administrative offset, federal salary offset, military pay offset, military pension, or annuity offset due to an SBA loan default. If you receive the SBA's Notice where federal salary offset, federal contractor offset or administrative offset is proposed, you have the opportunity to present evidence to OHA (13 C.F.R. §140.3(e)(1)). To have a hearing before OHA, you must request a hearing by filing an Appeals Petition within fifteen (15) days of receiving the Notice of Intent to Offset (13 C.F.R. §140.3(e)(1)). Therefore, time is of the essence and you will need to contact experienced legal counsel for assistance.
Understand that time deadlines must be met to pursue your right to file an Appeals Petition in response to an eligible Notice of Offset. If you fail to act within the regulatory time frame from receipt of the Notice, you can damage your opportunity of having your Appeals Petition accepted and heard by the SBA OHA on jurisdictional grounds. With several years of experience focusing on SBA debt collection cases, our SBA OHA Appeal Attorneys can help SBA debtors navigate the maze of complex issues governing SBA rules, regulations and appeals.
Our SBA attorneys can help with the following:
The Office of Hearings and Appeals (OHA) is an independent office of the Small Business Administration (SBA) established in 1983 to provide a quasi-judicial appeal of eligible SBA Program Decisions. The SBA OHA has jurisdiction to conduct proceedings in the collection of debts owed to the SBA and the United States under the Debt Collection Act of 1982, the Debt Collection Improvement Act of 1996, and 13 C.F.R. Part 140. The SBA OHA is on the Eighth Floor of SBA headquarters above the Federal Center SW Metro Stop. Their address is 409 Third Street, SW, Eighth Floor, Washington, DC 20416.
Aggressive collection of SBA debts has increased considerably in recent years. Understanding the SBA OHA appeals process requires experienced SBA OHA Appeal Attorneys who know and understand government contracts, federal regulations, including the nuances that may arise if the SBA tries to deprive your property without due process of law. You have the right to challenge administrative offset, federal salary offset, military pay offset, military pension, or annuity offset due to an SBA loan default. If you receive the SBA's Notice where federal salary offset, federal contractor offset or administrative offset is proposed, you have the opportunity to present evidence to OHA (13 C.F.R. §140.3(e)(1)). To have a hearing before OHA, you must request a hearing by filing an Appeals Petition within fifteen (15) days of receiving the Notice of Intent to Offset (13 C.F.R. §140.3(e)(1)). Therefore, time is of the essence and you will need to contact experienced legal counsel for assistance.
Understand that time deadlines must be met to pursue your right to file an Appeals Petition in response to an eligible Notice of Offset. If you fail to act within the regulatory time frame from receipt of the Notice, you can damage your opportunity of having your Appeals Petition accepted and heard by the SBA OHA on jurisdictional grounds. With several years of experience focusing on SBA debt collection cases, our SBA OHA Appeal Attorneys can help SBA debtors navigate the maze of complex issues governing SBA rules, regulations and appeals.
Our SBA attorneys can help with the following:
Client personally guaranteed SBA 7(a) loan for $350,000. The small business failed but because of the personal guarantee liability, the client continued to pay the monthly principal & interest out-of-pocket draining his savings. The client hired a local attorney but quickly realized that he was not familiar with SBA-backed loans or their standard operating procedures. Our firm was subsequently hired after the client received the SBA's official 60-day notice. After back-and-forth negotiations, we were able to convince the SBA to reinstate the loan, retract the acceleration of the outstanding balance, modify the original terms, and approve a structured workout reducing the interest rate from 7.75% to 0% and extending the maturity date for a longer period to make the monthly payments affordable. In conclusion, not only we were able to help the client avoid litigation and bankruptcy, but our SBA lawyers also saved him approximately $227,945 over the term of the workout.
Client’s small business obtained an SBA 7(a) loan for $750,000. She and her husband signed personal guarantees exposing all of their non-exempt income and assets. With just 18 months left on the maturity date and payment on the remaining balance, the Great Recession of 2008 hit, which ultimately caused the business to fail and default on the loan terms. The 7(a) lender accelerated and sent a demand for full payment of the remaining loan balance. The SBA lender’s note allowed for a default interest rate of about 7% per year. In response to the lender's aggressive collection action, Client's husband filed for Chapter 7 bankruptcy in an attempt to protect against their personal assets. However, his bankruptcy discharge did not relieve the Client's personal guarantee liability for the SBA debt. The SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection against the Client to the SBA. The Client then received the SBA Official 60-Day Notice. After conducting a Case Evaluation with her, she then hired the Firm to respond and negotiate on her behalf with just 34 days left before the impending referral to Treasury. The Client wanted to dispute the SBA’s alleged debt balance as stated in the 60-Day Notice by claiming the 7(a) lender failed to liquidate business collateral in a commercially reasonable manner - which if done properly - proceeds would have paid back the entire debt balance. However, due to time constraints, waivers contained in the SBA loan instruments, including the fact the Client was not able to inspect the SBA's records for investigation purposes before the remaining deadline, Client agreed to submit a Structured Workout for the alleged balance in response to the Official 60-Day Notice as she was not eligible for an Offer in Compromise (OIC) because of equity in non-exempt income and assets. After back and forth negotiations, the SBA Loan Specialist approved the Workout proposal, reducing the Client's purported liability by nearly $142,142.27 in accrued interest, and statutory collection fees. Without the Firm's intervention and subsequent approval of the Workout proposal, the Client's debt amount (with accrued interest, Treasury's statutory collection fee and Treasury's interest based on the Current Value of Funds Rate (CVFR) would have been nearly $291,030.
Our firm successfully assisted a client in closing an SBA Disaster Loan tied to a COVID-19 Economic Injury Disaster Loan (EIDL). The borrower obtained an EIDL loan of $153,800, but due to the prolonged economic impact of the COVID-19 pandemic, the business was unable to recover and ultimately closed.
As part of the business closure review and audit, we worked closely with the SBA to negotiate a resolution. The borrower was required to pay only $1,625 to release the remaining collateral, effectively closing the matter without further financial liability for the owner/officer.
This case highlights the importance of strategic negotiations when dealing with SBA settlements, particularly for businesses that have shut down due to unforeseen economic challenges. If you or your business are struggling with SBA loan debt, we focus on SBA Offer in Compromise (SBA OIC) solutions to help settle outstanding obligations efficiently.
.jpg)
