WILL EXPANDED SBA EXPOSURE TO START UPS CAUSE MORE SBA LOAN DEFAULTS?
We provide people who are facing an SBA loan default with solutions. We analyze SBA loan problems and provide solutions such as an SBA offer in compromise.
If you have a SBA loan default problem and you're working with your lender to wind down the business and settle the deficiency with an SBA Offer In Compromise (SBA OIC), time is of the essence. Lenders, banks, the CDC and the SBA generally do not wait much longer than 60-90 days after the defaulted borrower has been liquidated or shut down to tender an SBA OIC for consideration which, if accepted, could potentially release the guarantors from the deficiency for a lesser amount.
As part of the process, the bank, the lender, CDC or SBA should send you what is called the “60-day letter - click here to view: Sample 60 Day Referral Letter" where you'll be given only 60 days from the date of the letter to file an SBA OIC Package for SBA consideration. If you fail to timely submit an SBA OIC Package within the administrative time frame as noted in the letter you received, the bank or SBA will probably submit the file to the United States Department of Treasury for enforced collection, and thus, you will probably lose your one (1) time opportunity to settle for less than what is purportedly owed on the SBA loan debt through this special administrative process.
The United States Treasury Department rarely collects on these bad loans directly – rather they hire third-party collection agencies to handle them. These collection agencies don’t know anything about the history behind the loans – their job is to be ruthless in their collection efforts as they generally receive a generous percent of the collected amount or actually bought the so-called junk federal debt for pennies on the dollar.
Several of these federally approved third-party collection agencies or junk debt buyers are particularly nasty and rarely settle for less than 50% of the outstanding amount as the incentives for collection, litigation, and judgment pursuit are very high. Contrast that with the results that we have reviewed and settled and it’s easy to see the importance of addressing your outstanding SBA loan debt sooner rather than later, whether you’re working with a non-attorney consultant, an SBA Workout Attorney or the United States Treasury Department Circular 230 Practitioner, or attempting to do it yourself. If you think your banker is nasty or difficult to work with, you don’t want to experience the tactics of these collection agencies or junk debt buyers.
If you have an SBA loan default problem and received the 60-day referral letter to the Treasury Department, call us at 888-756-9969 to speak to one of our SBA Workout Attorneys and figure out your options. It's a complimentary Case Evaluation, or, simply a complete form to see if you pre-qualify for an SBA OIC.
Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure
Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements
Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.
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.
Client’s small business obtained an SBA 7(a) loan for $150,000. He and his wife signed personal guarantees and pledged their home as collateral. The SBA loan went into default, the term or maturity date was accelerated and demand for payment of the entire amount claimed was made. The SBA lender’s note gave it the right to adjust the default interest rate from 7.25% to 18% per annum. The business filed for Chapter 11 bankruptcy but was dismissed after 3 years due to its inability to continue with payments under the plan. Clients wanted to file for Chapter 7 bankruptcy, which would have been a mistake as their home had significant equity to repay the SBA loan balance in full as the Trustee would likely seize and sell the home to repay the secured and unsecured creditors. However, the SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection to the SBA. Clients then received the SBA Official 60-Day Notice and hired the Firm to respond to it and negotiate on their behalf. Clients disputed the SBA’s alleged balance of $148,000, as several payments made to the SBA lender during the Chapter 11 reorganization were not accounted for. To challenge the SBA’s claimed debt balance, the Firm Attorneys initiated expedited discovery to obtain government records. SBA records disclosed the true amount owed was about $97,000. Moreover, because the Clients’ home had significant equity, they were not eligible for an Offer in Compromise or an immediate Release of Lien for Consideration, despite being incorrectly advised by non-attorney consulting companies that they were. Instead, our Firm Attorneys recommended a Workout of $97,000 spread over a lengthy term and a waiver of the applicable interest rate making the monthly payment affordable. After back and forth negotiations, SBA approved the Workout proposal, thereby saving the home from imminent foreclosure and reducing the Clients' liability by nearly $81,000 in incorrect principal balance, accrued interest, and statutory collection fees.
Client personally guaranteed SBA 7(a) loan for $150,000. COVID-19 caused the business to fail, and the loan went into default with a balance of $133,000. Client initially hired a non-attorney consultant to negotiate an OIC. The SBA summarily rejected the ineligible OIC and the debt was referred to Treasury’s ureau of Fiscal Service for enforced collection in the debt amount of $195,000. We were hired to intervene and initiated discovery for SBA and Fiscal Service records. We were able to recall the case from Fiscal Service back to the SBA. We then negotiated a structured workout with favorable terms that saves the client approximately $198,000 over the agreed-upon workout term by waiving contractual and statutory administrative fees, collection costs, penalties, and interest.
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