SBA Short Sales
SBA short sales occur when the property securing an SBA loan is sold for less than the loan amount.
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.
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.
Client received the SBA's Official 60-Day Notice for a loan that was obtained by her small business in 2001. The SBA loan went into default in 2004 but after hearing nothing from the SBA lender or the SBA for 20 years, out of the blue, she received the SBA's collection due process notice which provided her with only one of four options: (1) repay the entire accelerated balance immediately; (2) negotiate a repayment arrangement; (3) challenge the legal enforceability of the debt with evidence; or (4) request an OHA hearing before a U.S. Administrative Law Judge.
Client hired the Firm to represent her with only 13 days left before the expiration deadline to respond to the SBA's Official 60-Day Notice. The Firm attorneys immediately researched the SBA's Official loan database to obtain information regarding the 7(a) loan. Thereafter, the Firm attorneys conducted legal research and asserted certain affirmative defenses challenging the legal enforceability of the debt. A written response was timely filed to the 60-Day Notice with the SBA subsequently agreeing with the client's affirmative defenses and legal arguments. As a result, the SBA rendered a decision immediately terminating collection of the debt against the client's alleged personal guarantee liability saving her $50,000.
Our firm successfully resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) in the original amount of $150,000 for a Florida-based borrower. The loan, issued on June 4, 2020, was secured by business assets and potential personal liability through the SBA's Security Agreement.
Following the permanent closure of the business, we guided the client through the SBA’s Business Closure Review process and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the business collateral for $2,910 — satisfying the borrower’s obligations under the Security Agreement and eliminating any further enforcement risk against the pledged assets.
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