SBA Loan Default: SBA to Increase Enforcement Efforts?
We help people who need to avoid SBA loan default by teaching them about SBA offer in compromise and about various SBA loan problems.
Discover the truth behind common misconceptions about SBA Offers in Compromise. Get insights into the myths of the OIC. Find out how to navigate these misconceptions effectively.
Book a Consultation CallWhen it comes to the world of small business finances, one topic that often causes confusion and uncertainty is SBA (Small Business Administration) Offers in Compromise (OIC). However, along with genuine information, there are several misconceptions floating around that can mislead business owners. In this comprehensive guide, we're here to debunk these myths and provide accurate insights into SBA Offers in Compromise.
Many business owners believe that once they apply for an SBA Offer in Compromise, their SBA debts will automatically be reduced, and their financial burdens will disappear. However, this is far from the truth. SBA Offers in Compromise go through a rigorous evaluation process, and not all offers are accepted. The success of your offer depends on various factors, including your ability to demonstrate genuine financial distress.
Some people think that applying for an SBA Offer in Compromise is as easy as filling out a basic form. In reality, the application process is complex and requires meticulous attention to detail. It involves submitting detailed financial information, tax documents, and a compelling case for your financial hardship. Working with an attorney experienced in SBA OICs can significantly improve your chances of success.
It's a common misconception that only people on the verge of bankruptcy qualify for an SBA Offer in Compromise. While financial hardship is a key criterion, it doesn't mean you need to be on the brink of collapse. As long as you can prove that paying the full amount would cause significant financial strain, you may be eligible.
Another misconception is that applying for an SBA Offer in Compromise puts an immediate stop to all collections activities by the SBA or Treasury. While the application is being evaluated collections can continue.
Every person's financial situation is unique, and SBA Offers in Compromise are not a standardized solution. The SBA takes into account various factors, including your assets, income, expenses, and future earning potential, when evaluating your application. There is no one-size-fits-all approach, and outcomes can vary widely.
While successfully settling your debt through an SBA Offer in Compromise is a positive step, it doesn't automatically repair your credit score overnight. The process of rebuilding your credit takes time and consistent financial responsibility.
The SBA's standard operating procedures state that such an offer is permissible, but in practice the SBA usually requires that the business has been closed with the secretary of state.
No, there are no upfront fees required to submit an application for an SBA Offer in Compromise. However, qualified legal counsel will request payment for their services. Furthermore, most accepted OICs must be paid in a lump sum within 60 days of acceptance.
Once the SBA accepts your Offer in Compromise, you are bound by the terms. Negotiation is not possible after acceptance.
The processing time for an SBA Offer in Compromise can vary widely, often taking several months. Patience is crucial during this period.
Separating fact from fiction is vital when it comes to SBA Offers in Compromise. By dispelling these common misconceptions, we hope to provide clarity and guidance for business owners seeking solutions to their SBA debt challenges. Remember, seeking professional advice and thoroughly understanding the process can significantly increase your chances of a successful outcome. Please contact us for more information.
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 COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement. The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.
The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.
The Firm was hired to investigate and find an alternate solution to the bankruptcy option. After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.
Clients personally guaranteed SBA 504 loan balance of $750,000. Clients also pledged the business’s equipment/inventory and their home as additional collateral. Clients had agreed to a voluntary sale of their home to pay down the balance. We intervened and rejected the proposed home sale. Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.
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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