Discover key factors regarding business loan repayment obligations after a business failure. Explore SBA loan forgiveness options and consult with Protect Law Group.
Book a Consultation CallHere at Protect Law Group, we have the privilege of serving clients all over the country. We understand the financial challenges that businesses may encounter, particularly when it comes to securing business loans. As a result, one common question that often arises is, "Can a Business Loan be Forgiven if the Business Fails?" In this blog post, we will delve into this important issue and discuss key considerations, including SBA loan forgiveness options. We aim to provide you with the necessary information to make informed decisions for your business's financial future. Read on to learn more!
Business loans are crucial for many entrepreneurs and small business owners to start, grow, or sustain their operations. However, economic downturns, unforeseen circumstances, or other factors can sometimes lead to business failure. In such instances, the question of loan repayment becomes pertinent.
When a business closes its doors, business owners need to understand that the debts incurred, such as business loans, do not simply vanish. Unfortunately, as a business owner, you may be personally liable for any loans that you have guaranteed. This means that even if your business is no longer operating, you may still be obligated to repay these loans if your business structure allows for a personal guarantee. It is crucial to have a thorough understanding of the financial responsibilities that come with owning a business, as it can have a significant impact on your finances in the event of closure.
The Small Business Administration (SBA) offers loan forgiveness programs for certain types of loans, providing a reduction of the debt obligation to eligible borrowers facing financial hardship. SBA forgiveness loan options can assist in alleviating the burden of repayment in specific circumstances. Our team can guide you through the process of applying for SBA loan forgiveness and help determine if you qualify for these programs.
At Protect Law Group, we specialize in assisting businesses and individuals with legal matters related to business loans, including SBA forgiveness. If you are grappling with a failed business and uncertain loan repayment obligations, we are here to provide expert guidance and personalized solutions tailored to your situation.
Our experienced attorneys are well-versed in navigating complex financial issues, including debt resolution, negotiating settlements, and exploring legal options to protect your interests. We will work closely with you to understand the specifics of your case and develop a strategic plan to address your concerns effectively.
Navigating the aftermath of a failed business can be overwhelming, but you don't have to face it alone. Our team at Protect Law Group is dedicated to helping you find clarity and peace of mind in uncertain times. Contact us today to schedule a consultation and take the first step toward resolving your business loan challenges.
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 obtained an SBA 7(a) loan for $324,000 to buy a small business and its facility. The business and real estate had an appraisal value of $318,000 at the time of purchase. The business ultimately failed but the participating lender abandoned the business equipment and real estate collateral even though it had valid security liens. As a result, the lender recouped nearly nothing from the pledged collateral, leaving the business owners liable for the deficiency balance. The SBA paid the lender the 7(a) guaranty money and was assigned ownership of the debt, including the right to collect. However, the clients never received the SBA Official 60-Day Notice and were denied the opportunity to negotiate an Offer in Compromise (OIC) or a Workout directly with the SBA before being transferred to Treasury's Bureau of Fiscal Service, which added an additional $80,000 in collection fees. Treasury garnished and offset the clients' wages, federal salary and social security benefits. When the clients tried to negotiate with Treasury by themselves, they were offered an unaffordable repayment plan which would have caused severe financial hardship. Clients subsequently hired the Firm to litigate an Appeals Petition before the SBA Office & Hearings Appeals (OHA) challenging the legal enforceability and amount of the debt. The Firm successfully negotiated a term OIC that was approved by the SBA Office of General Counsel, saving the clients approximately $205,000.
Small business and guarantors obtained an SBA COVID-EIDL loan for $1,000,000. Clients defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for collection. Treasury added nearly $500,000 in collection fees totaling $1,500,000. Clients were served with the SBA's Official 60-Day Notice and exercised the Repayment option by applying for the SBA’s Hardship Accommodation Plan. However, their application was summarily rejected by the SBA without providing any meaningful reasons. Clients hired the Firm to represent them against the SBA, Treasury and a Private Collection Agency. After securing government records through discovery, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury. During litigation and before the OHA court issued a final Decision and Order, the Firm successfully negotiated a reinstatement and recall of the loan back to the SBA, a modification of the original repayment terms, termination of Treasury's enforced collection and removal of the statutory collection fees.
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.
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