What Does the Banking Meltdown Mean for SBA Loans
With the meltdown of SVB and Signature banks and other banks teetering it may affect SBA loans in the future and current loans as well.
Small business owners who mismanage their finances could default on their Small Business Administration loan. To default, they must become delinquent for ninety days. At this point, their lender could exceed standard collection practices. These actions could include seizure of business assets such as bank accounts and real properties. A SBA Offer in Compromise could give the business owner an opportunity for settling the debt without serious repercussions.
After the SBA loan default, the lender notifies the borrower of probable action if they don't contact the lender and make arrangements for payment. The borrower has a deadline for these measures and should contact their attorney quickly. Once they have the SBA demand letter, their attorney could negotiate a settlement. Since the seizure process could increase the lender's costs, they are more likely to accept an appropriate offer.
Once the delinquency reaches ninety days, the loan enters default. At this stage, the lender is within their rights to acquire assets and the collateral used to secure the loan. They conduct the seizure process to acquire a balance that reflects what is owed by the borrower. Since the SBA is a government agency, they have federal rights and take action accordingly.
Any property listed on the loan documentation as collateral is seized immediately. This includes automobiles, real property, and business accounts. If this value doesn't reflect the balance owed, the agency could acquire more property and assets. Through a SBA loan foreclosure, they could acquire the borrower's primary residence if it was purchased with company funds.
A tax offset is a settlement in which the consumer could use their tax refunds to pay the balance. The lender seizes their tax refunds each year until the balance is paid off. If the borrower is behind on their tax payments, their attorney could acquire a settlement for the outstanding balance. A Tax Offset Program could help these consumers.
Small business owners should follow strategies for avoiding the effects of a SBA default. These actions could equate to total seizure of the business assets and properties. Business owners who wish to avoid these circumstances should contact an attorney now.
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.
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 homes as additional collateral. SBA OIC accepted $87,000 with the full lien release against the home.
Client personally guaranteed SBA 7(a) loan balance of over $150,000. Business failed and eventually shut down. SBA then pursued client for the balance. We intervened and was able to present an SBA OIC that was accepted for $30,000.
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