Elements of a Successful SBA Offer in Compromise
SBA loan settlements require specific knowledge of current policies and changes. Here are the elements of a successful SBA offer in compromise.
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.
Client personally guaranteed SBA 7(a) loan for $350,000. The small business failed but because of the personal guarantee liability, the client continued to pay the monthly principal & interest out-of-pocket draining his savings. The client hired a local attorney but quickly realized that he was not familiar with SBA-backed loans or their standard operating procedures. Our firm was subsequently hired after the client received the SBA's official 60-day notice. After back-and-forth negotiations, we were able to convince the SBA to reinstate the loan, retract the acceleration of the outstanding balance, modify the original terms, and approve a structured workout reducing the interest rate from 7.75% to 0% and extending the maturity date for a longer period to make the monthly payments affordable. In conclusion, not only we were able to help the client avoid litigation and bankruptcy, but our SBA lawyers also saved him approximately $227,945 over the term of the workout.
Our firm successfully assisted a client in closing an SBA Disaster Loan tied to a COVID-19 Economic Injury Disaster Loan (EIDL). The borrower obtained an EIDL loan of $153,800, but due to the prolonged economic impact of the COVID-19 pandemic, the business was unable to recover and ultimately closed.
As part of the business closure review and audit, we worked closely with the SBA to negotiate a resolution. The borrower was required to pay only $1,625 to release the remaining collateral, effectively closing the matter without further financial liability for the owner/officer.
This case highlights the importance of strategic negotiations when dealing with SBA settlements, particularly for businesses that have shut down due to unforeseen economic challenges. If you or your business are struggling with SBA loan debt, we focus on SBA Offer in Compromise (SBA OIC) solutions to help settle outstanding obligations efficiently.
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.
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