SBA Loan Defaults: Traditional Vices Ring Up Defaults
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 CallIf you have 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 an amount up to 32% of the original SBA debt balance as “administrative fees and costs.”
Sometimes, based on your financial status, an SBA Offer in Compromise won’t be an option. Some SBA debtors have too much in liquid assets and/or their monthly income is too high such that the SBA will not be amenable to an SBA Offer in Compromise.
If your financial profile and net worth disqualifies you for an SBA Offer in Compromise, one of your options is to negotiate a Repayment agreement with the SBA. After carefully reviewing your financial profile, an SBA Attorney can negotiate a reasonable Repayment agreement with the SBA prior to the cross-referral of your case to Treasury’s Bureau of Fiscal Service.
A Repayment agreement with the SBA is used to pay the claimed debt over a reasonable period of time. However, the SBA unilaterally defines a “reasonable period of time” as no more than 3 years. It, however, will not take into consideration certain factors as noted in the SBA Standard Operating Procedures (SOPs), the Code of Federal Regulations (CFR) or the Federal Claims Collection Standards (FCCS) to derive the monthly amount unless you assert your rights. Instead, the SBA will just calculate the monthly amount by dividing the unverified amount of the SBA debt by 36 months.
It is a one-sided negotiation that favors that SBA. Don’t fall into the trap by trying to negotiate the Repayment agreement terms by yourself. Instead, let an SBA Attorney analyze your financial profile and compare it against the FCCS to derive a “reasonable” amount that you can afford and present the terms to the SBA to arrive at a “win-win” negotiation that works for both parties.
Contact us today for a Case Evaluation.
Sometimes, based on your financial status, an SBA Offer in Compromise won’t be an option. Some SBA debtors have too much in liquid assets and/or their monthly income is too high such that the SBA will not be amenable to an SBA Offer in Compromise.
If your financial profile and net worth disqualifies you for an SBA Offer in Compromise, one of your options is to negotiate a Repayment agreement with the SBA. After carefully reviewing your financial profile, an SBA Attorney can negotiate a reasonable Repayment agreement with the SBA prior to the cross-referral of your case to Treasury’s Bureau of Fiscal Service.
A Repayment agreement with the SBA is used to pay the claimed debt over a reasonable period of time. However, the SBA unilaterally defines a “reasonable period of time” as no more than 3 years. It, however, will not take into consideration certain factors as noted in the SBA Standard Operating Procedures (SOPs), the Code of Federal Regulations (CFR) or the Federal Claims Collection Standards (FCCS) to derive the monthly amount unless you assert your rights. Instead, the SBA will just calculate the monthly amount by dividing the unverified amount of the SBA debt by 36 months.
It is a one-sided negotiation that favors that SBA. Don’t fall into the trap by trying to negotiate the Repayment agreement terms by yourself. Instead, let an SBA Attorney analyze your financial profile and compare it against the FCCS to derive a “reasonable” amount that you can afford and present the terms to the SBA to arrive at a “win-win” negotiation that works for both parties.
Contact us today for a Case Evaluation.
Clients executed several trust deeds pledging seven (7) real estate properties and unconditional personal guarantees for an SBA 7(a) loan from the participating lender. The clients' small business failed and eventually defaulted on repayment of the loan exposing all collateral pledged by the clients. The SBA subsequently acquired the loan balance from the lender, including the right to liquidate and collect all pledged collateral pursuant to the trust deed instruments.
The Firm was hired to negotiate separate release of lien proposals for all 7 real estate properties. In preparation for the work assignment, the Firm Attorneys initiated discovery to secure records from the SBA and Treasury's Bureau of Fiscal Service. After reviewing the records and understanding the interplay between the lender and the SBA, the attorneys then prepared, submitted and negotiated the release of lien (ROL) for each of the 7 real estate properties for consideration.
After submitting the proposals, the assigned SBA Loan Specialists approved each ROL package - significantly reducing the total SBA debt claimed.
Our firm successfully facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) where borrower received an SBA disaster loan of $150,000, but due to the severe economic impact of the COVID-19 pandemic, the business was unable to recover.
Despite the borrower’s efforts to maintain operations, shutdowns and restrictions significantly reduced the customer base and revenue, making continued operations unsustainable. After a thorough business closure review, we negotiated with the SBA, securing a resolution where the borrower paid only $6,015 to release the collateral, with no further financial liability for the owner/officer.
This case demonstrates how businesses affected by the pandemic can navigate SBA loan settlements effectively. If your business is struggling with an SBA EIDL loan, we specialize in SBA Offer in Compromise (SBA OIC) solutions to help close outstanding debts while minimizing financial burden.
Our firm successfully resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) in the original amount of $150,000 for a Florida-based borrower. The loan, issued on June 4, 2020, was secured by business assets and potential personal liability through the SBA's Security Agreement.
Following the permanent closure of the business, we guided the client through the SBA’s Business Closure Review process and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the business collateral for $2,910 — satisfying the borrower’s obligations under the Security Agreement and eliminating any further enforcement risk against the pledged assets.
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