How to Refinance an SBA Loan Successfully
If your SBA loan is now making it hard to operate your business, you may want to consider refinancing. Learn more about how to refinance an SBA loan.
Learn about different bankruptcy options for small business owners. Contact Protect Law Group serving San Diego, Orange, and Los Angeles Counties.
Book a Consultation CallFor small business owners facing overwhelming debt burdens, bankruptcy can be a viable option for gaining financial relief and a fresh start. However, when it comes to dealing with Small Business Administration (SBA) debt, understanding the bankruptcy options available is crucial. In this blog post, Protect Law Group will explore the various bankruptcy options specifically tailored for small business owners with SBA debts.
Chapter 7 bankruptcy, also known as liquidation bankruptcy, is a common option for small business owners looking to eliminate their SBA debts. Through this process, the business's assets are liquidated, and the proceeds will be used to pay off creditors, including the SBA. Once the debts are discharged, the business owner can start anew without the burden of SBA obligations.
For small business owners who wish to continue operating their businesses while seeking debt relief, Chapter 11 bankruptcy may be the right option. This type of bankruptcy allows for the restructuring of debts, including SBA loans, by developing a repayment plan that is manageable for the business. The plan typically extends the repayment period and may involve negotiating reduced interest rates or lower monthly payments.
In some cases, small business owners may be able to negotiate loan workouts or settlements directly with the SBA. This involves discussing revised repayment terms or exploring the possibility of settling the debt for a reduced amount. Working with an experienced bankruptcy attorney during these negotiations can greatly increase the chances of securing favorable terms.
The SBA offers an option called an Offer in Compromise (OIC), which allows small business owners to settle their SBA debts for less than the amount owed. This option is typically available if the business demonstrates an inability to repay the debt in full and can provide supporting financial documentation. While an OIC can be a viable solution, it's important to note that the decision lies with the SBA.
For small business owners struggling with SBA debts, exploring bankruptcy options can provide a path to financial recovery. Book a consultation call with one of Protect Law Group’s SBA loan attorneys serving San Diego, Orange, and Los Angeles Counties today!
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 7(a) loan default in the amount of $212,000 on behalf of an individual guarantor. The borrower’s business experienced a significant downturn in revenue and was unable to sustain operations, ultimately leading to closure and a remaining personal guaranty obligation.
After conducting a thorough financial review and preparing a comprehensive SBA Offer in Compromise (SBA OIC) submission, we negotiated directly with the SBA and lender to achieve a settlement of $50,000—approximately 24% of the outstanding balance. This favorable resolution released the guarantor from further personal liability and provided the opportunity to move forward free from the burden of enforced collection.
Clients executed personal and corporate guarantees for an SBA 7(a) loan from a Preferred Lender Provider (PLP). The borrower corporation defaulted on the loan exposing all collateral pledged by the Clients. The SBA subsequently acquired the loan balance from the PLP, including the right to collect against all guarantors. The SBA sent the Official Pre-Referral Notice to the guarantors giving them sixty (60) days to either pay the outstanding balance in full, negotiate a Repayment (Offer in Compromise (OIC) or Structured Workout (SW)), challenge their alleged guarantor liability or file a Request for Hearing (Appeals Petition) with the SBA Office of Hearings & Appeals.
Because the Clients were not financially eligible for an OIC, they opted for Structured Workout negotiations directly with the SBA before the debt was transferred to the Bureau of Fiscal Service, a division of the U.S. Department of Treasury for enforced collection.
The Firm was hired to negotiate a global Workout Agreement directly with the SBA to resolve the personal and corporate guarantees. After submitting the Structured Workout proposal, the assigned SBA Loan Specialist approved the requested terms in under ten (10) days without any lengthy back and forth negotiations.
The favorable terms of the Workout included an extended maturity at an affordable principal amount, along with a significantly reduced interest rate saving the Clients approximately $181,000 in administrative fees, penalties and interest (contract interest rate and Current Value of Funds Rate (CVFR)) as authorized by 31 U.S.C. § 3717(e) had the SBA loan been transferred to BFS.
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.
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