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.
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 received the SBA's Official 60-Day Notice for a loan that was obtained by her small business in 2001. The SBA loan went into default in 2004 but after hearing nothing from the SBA lender or the SBA for 20 years, out of the blue, she received the SBA's collection due process notice which provided her with only one of four options: (1) repay the entire accelerated balance immediately; (2) negotiate a repayment arrangement; (3) challenge the legal enforceability of the debt with evidence; or (4) request an OHA hearing before a U.S. Administrative Law Judge.
Client hired the Firm to represent her with only 13 days left before the expiration deadline to respond to the SBA's Official 60-Day Notice. The Firm attorneys immediately researched the SBA's Official loan database to obtain information regarding the 7(a) loan. Thereafter, the Firm attorneys conducted legal research and asserted certain affirmative defenses challenging the legal enforceability of the debt. A written response was timely filed to the 60-Day Notice with the SBA subsequently agreeing with the client's affirmative defenses and legal arguments. As a result, the SBA rendered a decision immediately terminating collection of the debt against the client's alleged personal guarantee liability saving her $50,000.
Our firm successfully negotiated an SBA offer in compromise (SBA OIC), settling a $974,535.93 SBA loan balance for just $18,000. The offerors, personal guarantors on an SBA 7(a) loan, originally obtained financing to purchase a commercial building in Lancaster, California.
The borrower filed for bankruptcy, and the third-party lender (TPL) foreclosed on the property. Despite the loan default, the SBA pursued the offerors for repayment. Given their limited income, lack of significant assets, and approaching retirement, we presented a strong case demonstrating their financial hardship.
Through strategic negotiations, we secured a favorable SBA settlement, reducing the nearly $1 million debt to a fraction of the amount owed. This outcome allowed the offerors to resolve their liability without prolonged financial strain.
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