SBA Loans Explained - The 7(a) Loan
If you obtain an SBA loan - specifically a 7(a) loan, you can use the loan proceeds to help finance a great variety of business expenses.
We Provide Nationwide Representation of Small Business Owners, Personal Guarantors, and Federal Debtors before the SBA and Treasury Department's Bureau of Fiscal Service
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 personally guaranteed an SBA 7(a) loan that was referred to the Department of Treasury for collection. Treasury claimed our clients owed over $220,000 once it added its statutory collection fees and interest. We were able to negotiate a significant reduction of the total claimed amount from $220,000 to $119,000, saving the clients over $100,000 by arguing for a waiver of the statutory 28%-30% administrative fees and costs.
Clients personally guaranteed SBA 7(a) loan balance of over $300,000. Clients also pledged their home as additional collateral. SBA OIC accepted for $87,000 with full release of lien against home.
Clients personally guaranteed SBA 504 loan balance of $750,000. Clients also pledged the business’s equipment/inventory and their home as additional collateral. Clients had agreed to a voluntary sale of their home to pay down the balance. We intervened and rejected the proposed home sale. Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.
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