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.
Businesses can suffer from excessive debt, just as individuals can. According to the SBA, almost half of all small businesses fail within the first five years, mostly because of poor credit, excessive debt and insufficient capital. Borrowing is sensible when it’s needed to finance expansion or boost cash flow, but many businesses end up in SBA loan default because they are not able to repay what they owe. Here, business owners can learn their options for dealing with debt, including making an SBA Offer in Compromise
The most ideal option for many is to try to save the business while managing debt. Many business owners take money out of their pockets to fund the company, but this strategy should only be taken if it is likely to pay off in the long term. If the business cannot be saved with an infusion of private funds, the owner must identify ways to cut costs. While layoffs are not the most appealing option, they may be necessary to keep a struggling business afloat.
Business owners should stay in touch with customers, seeking ways to increase exposure and revenue. Offer markdowns to loyal customers if they pay quicker, and contact suppliers to ask for payment arrangements and discounts. If this is done early enough, it may be sufficient to save a struggling company.
The business owner should contact creditors and advise them of the situation. Ignoring an SBA demand letter will make the situation worse, and it is easier to handle debt early on through a Tax Offset Program. It is in everyone’s best interests to find a workable solution, and clients should request lower interest rates, increased credit lines and/or an SBA Offer in Compromise.
Another option is to try to sell the company to repay creditors. It is easier to deal with a single buyer than to go through SBA loan foreclosure, and an orderly sale may free the owner from later obligations once creditors are paid. However, if the business’ debts are more than its assets, it may be hard to find a buyer.
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.
Our firm successfully resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) default in the amount of $150,000 on behalf of Illinois-based client. After the business permanently closed due to the economic impacts of the pandemic, the owners faced potential personal liability if the business collateral was not liquidated properly under the SBA Security Agreement.
We guided the client through the SBA’s Business Closure Review process, prepared a comprehensive financial submission, and negotiated directly with the SBA to release the collateral securing the loan. The borrower satisfied their collateral obligations with a payment of $2,075, resolving the SBA’s security interest.
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.
Our firm successfully resolved an SBA 7(a) loan default in the amount of $140,000 on behalf of a husband-and-wife guarantor pair. The business had closed following a prolonged decline in revenue, leaving the borrowers personally liable for the remaining balance.
After conducting a comprehensive financial analysis and preparing a detailed SBA Offer in Compromise (SBA OIC) package, we negotiated directly with the SBA and the lender to achieve a settlement for $70,000 — just 50% of the outstanding balance. This settlement released the borrowers from further personal liability and allowed them to move forward without the threat of enforced collection.
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