Congress Approves Emergency SBA Lending Limit
We will analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise for your SBA loan default.
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 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.
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.
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