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.
When facing financial challenges, it's crucial for small business owners to understand their options regarding small business bankruptcy. Two common bankruptcy filings for small businesses are Chapter 7 and Chapter 11. At Protect Law Group, we specialize in negotiating compromises and repayment plans with the Small Business Administration (SBA) on your behalf and we have successfully resolved millions of dollars in SBA debt.
In this blog, we'll discuss the differences between these bankruptcy types and explore the role of Small Business Administration (SBA) programs such as SBA loan forgiveness and SBA debt relief. We'll also touch on the SBA debt relief extension and how it can benefit struggling businesses.
Chapter 7 bankruptcy, also known as liquidation, is a process where a business ceases operations, and its assets are sold to pay off outstanding debts. This type of small business bankruptcy is suitable for businesses that cannot continue operating due to their financial struggles.
In contrast, Chapter 11 bankruptcy is a reorganization process that allows businesses to continue operating while restructuring their debts. This form of small business bankruptcy is ideal for companies with a viable business model that requires financial reorganization to become profitable again.
Another essential aspect to consider when navigating Chapter 7 or Chapter 11 small business bankruptcy or seeking SBA debt relief is negotiating a repayment plan with creditors. A well-negotiated repayment plan can ease financial burdens and allow businesses more time to recover and regain their footing. In some cases, this could even help avoid small business bankruptcy altogether.
When negotiating a repayment plan, it's vital to be transparent with your creditors and attorneys about your business's financial situation and your ability to make payments. By working closely with your creditors and demonstrating your commitment to repaying your debts, the lawyers at Protect Law Group may secure more favorable terms, such as reduced interest rates or extended payment periods.
Additionally, exploring options like SBA debt relief and SBA loan forgiveness can complement these negotiations, further strengthening your business's financial position.
SBA loan forgiveness programs, such as the Paycheck Protection Program (PPP), can alleviate the financial burden on small businesses by forgiving a portion or the entire loan amount, provided specific criteria are met. When a business qualifies for SBA loan forgiveness, it can prevent the need for small business bankruptcy by reducing the debt load.
It's important for business owners to understand the requirements of SBA loan forgiveness programs and seek assistance from professionals like the attorneys at Protect Law Group to maximize their chances of receiving loan forgiveness, potentially avoiding small business bankruptcy altogether.
If you have received a 60-day notice of repayment from the SBA and are considering Chapter 7 or Chapter 11 bankruptcy, call our office first!
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 personally guaranteed SBA 7(a) loan balance of over $150,000. Business failed and eventually shut down. SBA then pursued client for the balance. We intervened and was able to present an SBA OIC that was accepted for $30,000.
Client’s small business obtained an SBA 7(a) loan for $750,000. She and her husband signed personal guarantees exposing all of their non-exempt income and assets. With just 18 months left on the maturity date and payment on the remaining balance, the Great Recession of 2008 hit, which ultimately caused the business to fail and default on the loan terms. The 7(a) lender accelerated and sent a demand for full payment of the remaining loan balance. The SBA lender’s note allowed for a default interest rate of about 7% per year. In response to the lender's aggressive collection action, Client's husband filed for Chapter 7 bankruptcy in an attempt to protect against their personal assets. However, his bankruptcy discharge did not relieve the Client's personal guarantee liability for the SBA debt. The SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection against the Client to the SBA. The Client then received the SBA Official 60-Day Notice. After conducting a Case Evaluation with her, she then hired the Firm to respond and negotiate on her behalf with just 34 days left before the impending referral to Treasury. The Client wanted to dispute the SBA’s alleged debt balance as stated in the 60-Day Notice by claiming the 7(a) lender failed to liquidate business collateral in a commercially reasonable manner - which if done properly - proceeds would have paid back the entire debt balance. However, due to time constraints, waivers contained in the SBA loan instruments, including the fact the Client was not able to inspect the SBA's records for investigation purposes before the remaining deadline, Client agreed to submit a Structured Workout for the alleged balance in response to the Official 60-Day Notice as she was not eligible for an Offer in Compromise (OIC) because of equity in non-exempt income and assets. After back and forth negotiations, the SBA Loan Specialist approved the Workout proposal, reducing the Client's purported liability by nearly $142,142.27 in accrued interest, and statutory collection fees. Without the Firm's intervention and subsequent approval of the Workout proposal, the Client's debt amount (with accrued interest, Treasury's statutory collection fee and Treasury's interest based on the Current Value of Funds Rate (CVFR) would have been nearly $291,030.
Our firm successfully facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) where 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.
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