SBA COVID-19 PPP and EIDL Loans: SBA Ramps Up Audits and Investigations
SBA COVID-19 PPP and EIDL Loans: SBA Ramps Up Audits and Investigations
Many businesses of all sizes are struggling with debt. Both new and older troubled businesses have found that government legal action resulting from an SBA loan default magnifies their financial difficulties. An SBA loan foreclosure can also result in the loss of the owner's home and other personal assets.
The Inspector General of the SBA (OIG) has criticized the SBA's oversight of lenders and called for tighter controls. To date, the OIG's aggressive pursuit of lenders, brokers and others has resulted in numerous indictments, convictions and hefty fines. OIG audits of lenders found that 44% of the reviewed loans had inadequate documentation.
A qualified attorney from the Protect Law Group is able to conduct a comprehensive audit of an SBA loan in order to determine if the lender committed fraud or if any regulatory deficiencies or other SOP violations took place. If this audit reveals regulatory mishaps, a petition can be submitted to the SBA (or any other federal agency holding the debt) that will disclose the findings of the audit and ask that any and all collection actions be terminated.
The goal is to show that the SBA debt is not "legally enforceable" so that the government will seek recovery from the fraudulent bank or lender. Because of the Federal Statute of Limitations, the sooner this audit is performed and action is taken, the better.
At some point, a business owner with a past-due loan will receive an SBA demand letter. This letter will state that the loan will be referred to the Department of the Treasury unless an SBA Offer in Compromise is received within 60 days from the date of the letter. This is a one-time opportunity to settle the SBA loan for less than the amount that they say is owed.
The Tax Offset Program is employed by the Treasury to collect a defaulted loan balance. They will take any tax refunds, 15% of any federal benefits such as social security and garnish 15% of your net wages.
The attorneys at Protect Law Group have the knowledge and experience necessary to erase or settle your SBA debt. Don't delay. As a personal guarantor of this debt, your home is in jeopardy. Contact them today for a free case evaluation.
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 resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) in the original amount of $150,000 for a Florida-based borrower. The loan, issued on June 4, 2020, was secured by business assets and potential personal liability through the SBA's Security Agreement.
Following the permanent closure of the business, we guided the client through the SBA’s Business Closure Review process and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the business collateral for $2,910 — satisfying the borrower’s obligations under the Security Agreement and eliminating any further enforcement risk against the pledged assets.
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' 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.
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