SBA COVID PPP & EIDL Business Closure Reviews & Regulatory Compliance Audits
SBA COVID PPP & EIDL Business Closure Reviews & Regulatory Compliance Audits
Aggressive SBA Debt Collection Is Happening in 2026. Learn what to expect and how Protect Law Group can help with SBA Debt Collection
Book a Consultation CallIf you have an SBA loan—especially a COVID-EIDL, 7(a), 504 or other SBA-backed loan—and you have fallen behind, 2026 is going to bring the most aggressive federal collection environment in decades.
Recent statements and policy actions by the U.S. Department of Education, the U.S.Department of the Treasury, and the Small Business Administration (SBA) signal a coordinated federal push to restore “program integrity,” recover American taxpayer funds, and ramp up enforced collections.
For borrowers and guarantors, this means less tolerance, fewer pauses, and significantly increased risk of wage garnishment, Treasury offsets, lien foreclosure and referrals to the Department of Justice (DoJ) or Private Legal Counsel for aggressive litigation.
If you have an SBA loan in default or distress, the window to prepare and act before referral to Treasury is rapidly closing.
During and immediately after the COVID-19 pandemic, the federal government paused or relaxed collection activity across many programs. That era has ended.
Senior federal officials have publicly confirmed that the government intends to resume and expand enforcement actions to recover delinquent federal debt, by using:
The stated goal is to “protect taxpayer dollars” and restore accountability after years of pandemic-era forbearance. This shift is not theoretical. Agencies have already begun issuing formal notices, updating internal systems, and preparing for large-scale collection action in 2026.
The clearest warning sign comes from the federal student loan system.
The Department of Education has publicly confirmed that it will resume wage garnishment and involuntary collection for defaulted federal student loans beginning on January 7, 2026, following a notice period. These actions include:
Why does this matter to SBA borrowers?
Because the same enforcement mechanisms are also used for delinquent SBA loans.
The Treasury Department administers these tools across all federal debt programs. Once a loan is referred for collection, the process is largely automated and extremely difficult to stop without early legal representation and intervention.
Sources: Associated Press reporting (republished by ABC News) on the Administration’s early-2026 wage garnishment plan:
CBS News corroborates the same operational detail and quotes the Department’s statement to AP:
For SBA loans—especially COVID EIDL, 7(a), and 504 loans—the federal government has made clear that:
In fact, SBA’s Office of Inspector General has already documented that thousands of delinquent SBA loans are being routed toward federal collection channels.
For COVID EIDL borrowers specifically, SBA received a limited administrative window to manage certain loans internally—but that window is closing. As it does, enforcement responsibility shifts to Treasury, triggering the same machinery used for federal student loan collections.
Many borrowers mistakenly believe enforcement will not affect them—especially if their business closed during COVID or if they never heard back from SBA.
In reality:
Once enforced collection begins, negotiating leverage is drastically reduced.
If you are behind on an SBA loan—or fear you may be—you may still have options before enforcement begins, including:
Each case is fact-specific, and early legal review can often make a world of difference.
At Protect Law Group, we focus exclusively on SBA debt resolution and federal non-tax debt collection defense. We help borrowers and guarantors understand their rights, evaluate exposure, and act before wage garnishment or other asset seizure occurs.
If you have SBA or Treasury debt, contact Protect Law Group today for a Confidential Case Evaluation:
👉 Visit: www.SBA-Attorneys.com
👉 Call: 888-756-9969
👉 Email: Info@ProtectLawGroup.com
Do not wait for your SBA debt to get referred to Treasury, the DoJ or Private Legal Counsel. Get ahead of it. Protect yourself and your rights.
Our SBA Attorneys have represented thousands of small businesses, contested or negotiated debts assessed against owners, officers and guarantors, and litigated cases at the SBA Office of Hearings & Appeals (OHA) Court before United States Administrative Law Judges (ALJs).
This article is provided for informational purposes only and does not constitute legal advice. Consult a qualified SBA-Attorney for advice regarding your individual situation.
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.
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.
Client received the SBA's Official 60-Day Notice for a loan that was obtained by her small business in 2001. The SBA loan went into default in 2004 but after hearing nothing from the SBA lender or the SBA for 20 years, out of the blue, she received the SBA's collection due process notice which provided her with only one of four options: (1) repay the entire accelerated balance immediately; (2) negotiate a repayment arrangement; (3) challenge the legal enforceability of the debt with evidence; or (4) request an OHA hearing before a U.S. Administrative Law Judge.
Client hired the Firm to represent her with only 13 days left before the expiration deadline to respond to the SBA's Official 60-Day Notice. The Firm attorneys immediately researched the SBA's Official loan database to obtain information regarding the 7(a) loan. Thereafter, the Firm attorneys conducted legal research and asserted certain affirmative defenses challenging the legal enforceability of the debt. A written response was timely filed to the 60-Day Notice with the SBA subsequently agreeing with the client's affirmative defenses and legal arguments. As a result, the SBA rendered a decision immediately terminating collection of the debt against the client's alleged personal guarantee liability saving her $50,000.
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