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Assumption, Assignment and Sale of SBA 7(a) Loans

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Assumption, Assignment and Sale of SBA 7(a) Loans

https://youtu.be/mSZoxM5QVNo

You have a business with an SBA guaranteed 7(a) loan and now you are looking to sell the business.  What about the loan?  Can you simply assign the loan and have the buyer assume the loan in your sale documents without anything more?  Generally speaking, the SBA will need to approve the assumption and certain requirements must be met:

1. Unless the assumption is part of a workout or the loan is in liquidation status, the proposed assumptor must meet the applicable 7(a) Loan eligibility requirements in the most current version of the SBA’s standard operating procedures;

2. The proposed assumptor should be the primary owner of the business;

3. The proposed assumptor should have business experience and management skills that are equal to or better than the Borrower's;

4. The proposed assumptor must have a satisfactory credit history;

5. The proposed assumptor must have the ability to repay the SBA loan in full;

6. No collateral should be released;

7. No collateral should be subordinated except as otherwise provided with regard to funds that will be used to make improvements to the collateral that will maintain or increase its value;

8. The proposed assumption should not have a negative impact on the operation of the business;

9. The proposed assumption must not have a negative impact on the recoverable value of the collateral;

10. The existing collateral should be adequate to secure the loan, if not and whenever possible, additional collateral should be required as a condition for the assumption;

11. Existing Obligors must not be released without SBA’s prior written approval;

12. The terms of the assumption must be set out in a written agreement signed by all of the parties to the agreement;

13. The terms of the assumption must include a "due on sale or death" clause that prohibits any future assumption of the SBA loan; and

14. The terms of the assumption must not include a real estate contract, i.e., the seller may not retain title to the property until an agreed upon amount is paid.

If you are facing an SBA loan default, contact Protect Law Group today at www.sba-attorneys.com or 1-888-756-9969 to schedule your FREE initial consultation.

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$337,000 SBA 504 LOAN - SBA OIC CASH SETTLEMENT

Clients personally guaranteed 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.

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$750,000 SBA 504 LOAN - NEGOTIATED TERM REPAYMENT AGREEMENT

Clients personally guaranteed SBA 504 loan balance of $750,000.  Clients also pledged the business’s equipment/inventory and their home as additional collateral.  Clients had agreed to a voluntary sale of their home to pay down the balance.  We intervened and rejected the proposed home sale.  Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.

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$300,000 SBA 7A LOAN - SBA OIC TERM SETTLEMENT

Clients personally guaranteed SBA 7(a) loan balance of over $300,000.  Clients also pledged their home as additional collateral.  SBA OIC accepted for $87,000 with full release of lien against home.

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