SBA Wage Garnishment: What Can You Do About It?
If you default on your SBA loan, there are a number of ways it can be collected. We take a look at wage garnishment and what you can do about it.
Betsy DeVos and Kelly Loeffler: A Comparative Look at Trump Administration Appointees and Their Approach to Federal Non-Tax Debt Settlements
Book a Consultation Call"President-elect Donald Trump has nominated former Georgia Sen. Kelly Loeffler to head his Small Business Administration.
The SBA was one of the last agencies without a head nominated by Trump.
"Small Businesses are the backbone of our Great Economy," Trump wrote in a Truth Social post on Wednesday. "Kelly will bring her experience in business and Washington to reduce red tape, and unleash opportunity for our Small Businesses to grow, innovate, and thrive. She will focus on ensuring that SBA is accountable to Taxpayers by cracking down on waste, fraud, and regulatory overreach."
Loeffler served as the co-chairwoman of Trump's second inauguration committee and was expected to get a spot in his administration.
She lost in a special election in 2021 to Sen. Raphael Warnock (D-GA) after she was appointed to Georgia's Senate seat by Gov. Brian Kemp. Since then, she's been a top donor to Trump, donating millions to his successful reelection campaign.
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"Kelly was a tremendous fighter in the U.S. Senate during the first Trump Administration, including helping to pass the first ever bill to protect Women in Sports," Trump added in his statement. "Prior to her tenure in the U.S. Senate, Kelly built a 25 year career in financial services and technology. Along with her amazing husband, Jeff, she helped build a Fortune 500 company from 100 employees to over 10,000, as Executive VP. She and Jeff also helped me secure the Big Election Win in Georgia!"
Before Loeffler was nominated to take the reins as SBA Administrator, she was rumored to be Trump's Secretary of Agriculture. That nomination, however, went to Brooke Rollins."
Source: https://www.msn.com/en-us/money/smallbusiness/trump-nominates-kelly-loeffler-for-sba-administrator/ar-AA1vhWtf?ocid=msedgntp&pc=U531&cvid=b8f3121e830440b38a27657fda0814dd&ei=56
In both Donald Trump’s presidential terms, his administration has demonstrated a tendency to appoint leaders with strong business credentials and free-market ideologies to helm key agencies. Two notable examples—Betsy DeVos, Secretary of Education during Trump's first term, and Kelly Loeffler, the new appointee to lead the Small Business Administration (SBA) in his second term—exemplify this trend. While their respective agencies deal with vastly different types of loans, both DeVos and Loeffler share a penchant for policies that resist expansive borrower relief programs, favoring stricter interpretations of fiscal accountability.
This article delves into parallels between DeVos’ handling of the Department of Education’s borrower defense rule and the anticipated approach Loeffler might take toward delinquent SBA loans, including the much-scrutinized COVID-EIDL program.
Betsy DeVos’ tenure as Secretary of Education was marked by contentious decisions, particularly her rollback of the Obama-era borrower defense rule. Designed to provide debt relief to students defrauded by for-profit colleges, this rule allowed borrowers to have their federal student loans forgiven if their schools engaged in deceptive practices. DeVos opposed these regulations, arguing that they were too lenient, overburdened taxpayers, and created a "free money" culture.
Under DeVos’ leadership, the Department of Education tightened requirements for borrower defense claims, requiring more stringent proof of harm and instituting complex procedural hurdles. Critics accused her of prioritizing the interests of for-profit colleges and the bottom line over defrauded borrowers, a stance DeVos defended as a necessary measure to prevent abuse of the system.
Fast forward to Trump's second term, and Kelly Loeffler, a billionaire businesswoman and former U.S. Senator, if confirmed, will assume leadership of the SBA. Known for her staunch support of free-market principles, Loeffler’s appointment comes at a critical time for the SBA. The agency faces the monumental task of managing the fallout from the COVID-19 pandemic, particularly the Economic Injury Disaster Loan (EIDL) program, which disbursed billions in loans to small businesses without conducting the due diligence of loan underwriting.
The COVID-EIDL program has faced significant scrutiny, with allegations of fraud, mismanagement, misuse of proceeds, and a high volume of delinquent loans. While many small businesses legitimately relied on these loans to survive the pandemic and state mandated shutdowns, others struggled to repay as economic recovery lagged. This sets the stage for Loeffler to determine how the SBA will handle the increasing SBA loan delinquencies and potential resolution, such as the Offer in Compromise (OIC) and Structured Workout (SW) programs.
Both DeVos and Loeffler appear to prioritize fiscal conservatism over borrower relief. Just as DeVos sought to limit forgiveness of student loans, Loeffler may be expected to resist widespread forgiveness or lenient settlements of SBA loans, including COVID-EIDL debt. Her business background suggests a focus on enforcing repayment obligations and minimizing American Taxpayer exposure.
DeVos implemented stricter criteria for borrower defense claims arguably in violation of the Administrative Procedures Act (APA), and Loeffler may follow a similar path by enforcing stringent standards for SBA debt relief through OIC or restructuring through SW which may not adhere to applicable federal regulations (CFR) or standard operating procedures (SOPs). Small businesses and guarantors that received COVID-EIDL funds may face detailed audits or burdensome documentation requirements in order to apply for relief.
DeVos was often accused of siding with for-profit colleges at the expense of defrauded students. Similarly, Loeffler may face criticism if her policies appear to favor protecting the SBA's financial health over aiding struggling small businesses, guarantors or owner/officers "on the hook" for repayment of the SBA loan balance. Both approaches reflect the administration's broader ideological stance on limiting government intervention in financial markets.
For borrowers, owner/officers and guarantors, the implications are significant. Under DeVos, thousands of students were left navigating a labyrinthine claims process, with many denied relief altogether. Small business owners/officers and guarantors with delinquent or troublesome SBA loans may face a similar uphill battle, especially if Loeffler’s SBA adopts aggressive collection tactics or resists settlement options after her confirmation.
The COVID-EIDL program is particularly contentious. Many small businesses, already grappling with post-pandemic recovery, argue that leniency is warranted given the extraordinary circumstances under which these loans were issued. However, Loeffler’s leadership could signal a push for accountability, emphasizing repayment even in the face of economic or financial hardship - putting more individuals at the brink of filing for bankruptcy protection and ruining their credit.
Click Inc.'s article "Incoming SBA Chief Kelly Loeffler" for more information on what to expect for small business during Trump's final administration.
While DeVos and Loeffler are different people, their shared philosophy as billionaires, fiscal conservatism and borrower accountability suggests a common thread in Trump’s administrative approach to debt management. For student debtors under DeVos, relief was very hard to come by. For small business owners and debtors under Loeffler as the new SBA Administrator, if confirmed, the road to resolving SBA loans—especially COVID-EIDL debt—may prove equally challenging.
The comparison underscores a broader question: how should federal agencies balance fiscal responsibility with reasonable empathy for borrowers facing extraordinary circumstances? If Loeffler is confirmed as the new SBA Administrator and her tenure unfolds for 2025 and beyond, her policy decisions may undoubtedly shape the future of the SBA and leave a lasting impact on America’s small business landscape and those SBA debtors that seek resolution without wanting to file for bankruptcy.
Embark on the journey to SBA debt relief with the SBA Attorneys at Protect Law Group by your side. Our focused expertise in SBA debt relief can help you and your small business overcome financial hurdles and hopefully secure a stable future. Contact us now at 1-888-756-9969 to take the first step towards exploring your options and regain control of your financial well-being.
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' 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.
Client’s small business obtained an SBA 7(a) loan for $150,000. He and his wife signed personal guarantees and pledged their home as collateral. The SBA loan went into default, the term or maturity date was accelerated and demand for payment of the entire amount claimed was made. The SBA lender’s note gave it the right to adjust the default interest rate from 7.25% to 18% per annum. The business filed for Chapter 11 bankruptcy but was dismissed after 3 years due to its inability to continue with payments under the plan. Clients wanted to file for Chapter 7 bankruptcy, which would have been a mistake as their home had significant equity to repay the SBA loan balance in full as the Trustee would likely seize and sell the home to repay the secured and unsecured creditors. However, the SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection to the SBA. Clients then received the SBA Official 60-Day Notice and hired the Firm to respond to it and negotiate on their behalf. Clients disputed the SBA’s alleged balance of $148,000, as several payments made to the SBA lender during the Chapter 11 reorganization were not accounted for. To challenge the SBA’s claimed debt balance, the Firm Attorneys initiated expedited discovery to obtain government records. SBA records disclosed the true amount owed was about $97,000. Moreover, because the Clients’ home had significant equity, they were not eligible for an Offer in Compromise or an immediate Release of Lien for Consideration, despite being incorrectly advised by non-attorney consulting companies that they were. Instead, our Firm Attorneys recommended a Workout of $97,000 spread over a lengthy term and a waiver of the applicable interest rate making the monthly payment affordable. After back and forth negotiations, SBA approved the Workout proposal, thereby saving the home from imminent foreclosure and reducing the Clients' liability by nearly $81,000 in incorrect principal balance, accrued interest, and statutory collection fees.
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.
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