What You Need To Know About SBA Repayment Plans
Learn more about SBA debt relief programs and how Protect Law Group can help with SBA repayment plan negotiations. Get in touch with us today.
Contact Our SBA Attorneys for Nationwide Representation of SBA and Treasury Debt Problems
Book a Consultation CallIf you have recently received a letter from Treasury’s Bureau of Fiscal Service (BFS) demanding that you pay off an SBA debt or other Federal Agency Creditor non-tax debt where the Government has added an amount up to 30% of the original balance as “administrative fees and costs,” you should consider exercising your statutory rights as codified in the Debt Collection Improvement Act (DCIA) of 1996. Do not ignore this important letter. You will need to act quickly before Treasury begins to utilize their administrative collection weapons against you.
Sometimes, based on your financial status, a compromise or settlement with Treasury’s BFS won’t be a viable option. Some federal debtors have too much in liquid assets and/or their monthly income is too high such that the Treasury’s BFS will not be amenable to accepting your compromise or settlement offer.
If your financial profile and net worth disqualifies you for a compromise, one of your options is to negotiate a repayment agreement with the Treasury’s BFS. After carefully reviewing your financial situation, we can negotiate a reasonable repayment agreement with the Treasury’s BFS.
A repayment agreement with the Treasury’s BFS is used to pay the claimed debt over a reasonable period of time. However, the Treasury’s BFS unilaterally defines a “reasonable period of time” as no more than 3 years. It, however, does not take into consideration certain factors as noted in the DCIA of 1996, the supporting Code of Federal Regulations (CFR) or the Federal Claims Collection Standards (FCCS) to derive the monthly amount. Instead, it just calculates the monthly amount by dividing the unverified amount of the alleged federal non-tax debt by 36 months.
It is a one-sided negotiation that favors the Treasury’s BFS. Don’t fall into the trap by trying to negotiate the repayment agreement terms by yourself. Instead, let us 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 Treasury’s BFS to arrive at a “win-win” negotiation that works for both parties.
Contact us today for a Case Evaluation.
Clients obtained an SBA 7(a) loan for $324,000 to buy a small business and its facility. The business and real estate had an appraisal value of $318,000 at the time of purchase. The business ultimately failed but the participating lender abandoned the business equipment and real estate collateral even though it had valid security liens. As a result, the lender recouped nearly nothing from the pledged collateral, leaving the business owners liable for the deficiency balance. The SBA paid the lender the 7(a) guaranty money and was assigned ownership of the debt, including the right to collect. However, the clients never received the SBA Official 60-Day Notice and were denied the opportunity to negotiate an Offer in Compromise (OIC) or a Workout directly with the SBA before being transferred to Treasury's Bureau of Fiscal Service, which added an additional $80,000 in collection fees. Treasury garnished and offset the clients' wages, federal salary and social security benefits. When the clients tried to negotiate with Treasury by themselves, they were offered an unaffordable repayment plan which would have caused severe financial hardship. Clients subsequently hired the Firm to litigate an Appeals Petition before the SBA Office & Hearings Appeals (OHA) challenging the legal enforceability and amount of the debt. The Firm successfully negotiated a term OIC that was approved by the SBA Office of General Counsel, saving the clients approximately $205,000.
Client's small business obtained an SBA COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement. The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.
The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.
The Firm was hired to investigate and find an alternate solution to the bankruptcy option. After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.
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.
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