Are you unable to pay off your SBA loan or need to decrease the amount you pay? It's possible to get an SBA loan deferment. Here's how to qualify.
Book a Consultation CallWhile half of all small businesses fold in the first five years, lots of businesses could be saved if they only knew how to manage their finances. If you're struggling with SBA loans, a simple loan deferment could save your business from ruin. The ability to bounce back from bumps in the road is something that every business owner should have the chance to do.
SBA Loan Deferment
Here are four major factors to consider in order to get the help you need.
If you haven't been keeping your books up to date, you need to ensure that you've got the evidence to talk about your cash flow. The SBA has encouraged everyone lending its specialized loans to be more flexible than they were in the past. If you need a deferment, you need to show that you're truly in the position to need one.
Cash flow is how much money you're making balanced out with how much you're spending from month to month. If you've got a log of outstanding IOUs from your clients, then you need to focus on getting that money into your accounts. If you're bad at getting the cash you're owed into your account, that's not an issue of cash flow so much as management.
You could qualify for a deferment if sales have slowed and you're doing everything right. If you have too little cash, then they might think that you're beyond help and they might not want to offer you a deferment. If you have too much cash flow coming in, then the SBA or lenders are going to think that you just need to manage your business better.
Low cash flow for a business model that's fairly good could just be a temporary issue. If you're sure that the cash flow problem is temporary, make sure that your books show that fact.
If you're looking for help with your SBA loans, you need to show that you're on the right track. Deferment isn't offered to those terminal cases where money is just burning up as the clock ticks. It's given to companies who have their act together but who are struggling with some basic issues.
Sometimes those issues are outside of your control. With the 2019 government shutdown or changes in tariffs for manufacturing materials, that trickle down impacts lots of companies. While most people don't think that their daily lives are impacted by these political conversations, there are concrete impacts all over.
When the price of steel goes up, it costs more to buy a car. If the price of gas or fuel goes up, then the cost of a plane ticket goes up too. No matter what your industry is, you could see some issues that cause your profits to dip, even just temporarily.
If you're operating with very thin margins, describe that to your lender in very clear terms. If you've been making on-time payments otherwise, then show them the records. A responsible company that pays their bills and loans on time regularly is one that is worth offering consideration to.
Your ability to qualify for deferment relies heavily on how responsive you are to the lender you're looking for help from. When you want consideration regarding your SBA loan or need a deferment for your SBA payments, you need to communicate clearly. The people who are trying to help you need you to be clear and communicate with them in an open and prompt manner.
If the lender you're looking for help from asks for documentation by a certain deadline, attempt to beat the deadline by a few days. While it may seem obvious to you, lots of business owners put this communication at a low priority. It's not up to your lender to follow up with you when you're the one looking for help from them.
Should a deadline for documentation pass, you're going to need to approach your lender with your hat in hand. And you'd better have everything in proper order if you're going to try to get them to bend the rules for you. Going in unprepared or without everything they need is going to seem arrogant.
If you need to put together an application package for deferment, league time to put together the document. At the end of the day, you're asking for something from your lender or service provider. You should do more than meet them halfway when it comes to giving them what they ask for.
When you're looking for help deferring your loan you need to show that you've got a reason to balance things out. When you have collateral to offer, you show that you're working hard and trying to make your business work.
Your lender can get aggressive when you're behind on payments. If your loan is secured with equipment that you need to build your business, they're going to want to help you out. It's much harder to try to flip equipment, especially if your company relies on it.
If they really want you to succeed, they're going to want you to keep that equipment so you can do the work you need to in order to pay them back. They're in the business of building wealth, not cutting you off at the knees.
If your lender has collateral that's worth way more than what you owe, they might flip it if your business model doesn't seem strong. Make sure you communicate clearly at the first sign of trouble to protect your business model.
If you want to get the loan deferment that you deserve as a business owner, you need clear communication and a good relationship with your lender. The clearer you are with them, the easier it'll be to get your deferment.
If you are in danger of defaulting on your SBA loan, contact Protect Law Group today for a FREE initial consultation. 1-888-756-9969.
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.
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.
Our firm successfully facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) f borrower received an SBA disaster loan of $150,000, but due to the severe economic impact of the COVID-19 pandemic, the business was unable to recover.
Despite the borrower’s efforts to maintain operations, shutdowns and restrictions significantly reduced the customer base and revenue, making continued operations unsustainable. After a thorough business closure review, we negotiated with the SBA, securing a resolution where the borrower paid only $6,015 to release the collateral, with no further financial liability for the owner/officer.
This case demonstrates how businesses affected by the pandemic can navigate SBA loan settlements effectively. If your business is struggling with an SBA EIDL loan, we specialize in SBA Offer in Compromise (SBA OIC) solutions to help close outstanding debts while minimizing financial burden.
The clients are personally guaranteed an SBA 7(a) loan. The SBA referred the debt to the Department of Treasury, which was seeking payment of $487,981 from our clients. We initially filed a Cross-Servicing Dispute, which was denied. As a result, we filed an Appeals Petition with the SBA Office of Hearings and Appeals asserting legal defenses and supporting evidence uncovered during the discovery and investigation phase of our services. Ultimately, the SBA settled the debt for $25,000 - saving our clients approximately $462,981.
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