For Your Business: Should You Consider Small Loans from the SBA?
The SBA can help advance such entrepreneurs small loans to give their firms a chance at thriving again. But you will have to sign a personal guarantee.
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 executed several trust deeds pledging seven (7) real estate properties and unconditional personal guarantees for an SBA 7(a) loan from the participating lender. The clients' small business failed and eventually defaulted on repayment of the loan exposing all collateral pledged by the clients. The SBA subsequently acquired the loan balance from the lender, including the right to liquidate and collect all pledged collateral pursuant to the trust deed instruments.
The Firm was hired to negotiate separate release of lien proposals for all 7 real estate properties. In preparation for the work assignment, the Firm Attorneys initiated discovery to secure records from the SBA and Treasury's Bureau of Fiscal Service. After reviewing the records and understanding the interplay between the lender and the SBA, the attorneys then prepared, submitted and negotiated the release of lien (ROL) for each of the 7 real estate properties for consideration.
After submitting the proposals, the assigned SBA Loan Specialists approved each ROL package - significantly reducing the total SBA debt claimed.
Clients personally guaranteed an SBA 504 loan balance of $337,000. The Third Party Lender had obtained a Judgment against the clients. We represented clients before the SBA and negotiated an SBA OIC that was accepted for $30,000.
Clients' 7(a) loan was referred to Treasury's Bureau of Fiscal Service for enforced collection in 2015. They not only personally guaranteed the loan, but also pledged their primary residence as additional collateral. One of the clients filed for Chapter 7 bankruptcy thinking that it would discharge the SBA 7(a) lien encumbering their home. They later discovered that they were mistakenly advised. The Firm was subsequently hired to review their case and defend against a series of collection actions. Eventually, we were able to negotiate a structured workout for $180,000 directly with the SBA, saving them approximately $250,000 (by reducing the default interest rate and removing Treasury's substantial collection fees) and from possible foreclosure.
.jpg)
