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Common Misconceptions about SBA Offers in Compromise: Debunking the Myths

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.

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Common Misconceptions about SBA Offers in Compromise: Debunking the Myths

Introduction

When 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.

Common Misconceptions about SBA Offers in Compromise: Debunking the Myths

Myth: SBA Offers in Compromise are a Guaranteed Solution

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.

Myth: Applying for an Offer in Compromise is a Simple Process

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.

Myth: SBA Offers in Compromise are Only for People on the Brink of Bankruptcy

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.

Myth: Applying for an SBA Offer in Compromise Guarantees a Temporary Halt in Collections

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.

Myth: SBA Offers in Compromise are a "One-Size-Fits-All" Solution

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.

Myth: Acceptance of an SBA Offer in Compromise Automatically Restores Good Credit

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.

FAQs

Can I Apply for an SBA Offer in Compromise if I'm Still Operating My Business?

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.

Are There Any Upfront Fees for Applying for an SBA Offer in Compromise?

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.

Can I Negotiate the Terms of an Accepted Offer in Compromise?

Once the SBA accepts your Offer in Compromise, you are bound by the terms. Negotiation is not possible after acceptance.

How Long Does the SBA Offer in Compromise Process Usually Take?

The processing time for an SBA Offer in Compromise can vary widely, often taking several months. Patience is crucial during this period.

Conclusion

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.

Why Hire Us to Help You with Your Treasury or SBA Debt Problems?

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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

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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

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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.

$750,000 SBA 504 LOAN - NEGOTIATED TERM REPAYMENT AGREEMENT

$750,000 SBA 504 LOAN - NEGOTIATED TERM REPAYMENT AGREEMENT

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.

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$680,000 SBA COVID-EIDL LOAN - SBA OHA LITIGATION

Small business sole proprietor obtained an SBA COVID-EIDL loan for $500,000. Client defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for aggressive collection. Treasury added $180,000 in collection fees totaling $680,000+. Client tried to negotiate with Treasury but was only offered a 3-year or 10-year repayment plan. Client hired the Firm to represent before the SBA, Treasury and a Private Collection Agency.  After securing government records through discovery and reviewing them, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury citing a host of purported violations. The Firm was able to negotiate a reinstatement and recall of the loan back to the SBA, participation in the Hardship Accommodation Plan, termination of Treasury's enforced collection and removal of the statutory collection fees.

$220,000 SBA 7A LOAN -DOT WAIVER OF ADMINISTRATIVE FEES & COSTS

$220,000 SBA 7A LOAN -DOT WAIVER OF ADMINISTRATIVE FEES & COSTS

Clients personally guaranteed an SBA 7(a) loan that was referred to the Department of Treasury for collection.  Treasury claimed our clients owed over $220,000 once it added its statutory collection fees and interest.  We were able to negotiate a significant reduction of the total claimed amount from $220,000 to $119,000, saving the clients over $100,000 by arguing for a waiver of the statutory 28%-30% administrative fees and costs.

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