How Protect Law Group Can Help Your Small Business Achieve Loan Forgiveness
Learn how Protect Law Group's SBA Attorneys in San Diego, Orange, and Los Angeles Counties can assist your small business in achieving loan forgiveness. Contact us!
When you start a business, the last thing on your mind is that it will fail! After all, you’ve put in so much time and effort to help it succeed. However, not all businesses are successful, but nearly every business must take out loans. But what happens to those loans if the business fails, and what does SBA loan default entail?
Here at Protect Law Group, our SBA debt attorneys are here to help you find realistic solutions to your SBA loan debt. We want you to resolve your debt problems, and we also know that navigating the US Treasury Debt Collection process can be challenging. Learn more about paying back an SBA loan after a business fails, and if you owe more than $30,000 and you’d like to schedule a consultation with one of our SBA debt attorneys, contact us today.
Business loan default can be overwhelming, but what exactly does default mean? If you’ve missed one payment, that doesn’t necessarily mean you are defaulting on your loan. Most lenders define default loans as missing two to three payments, and they will then report you to a credit agency, which will record any further missed payments.
Ultimately, each small business lender considers loan default at different points, and you’ll need to look at your loan agreement to determine what that point is for your particular small business loan. If your loan defaults, they will reach out to you and ask why you have missed your payments or offer options for creating a more realistic payment schedule. Ideally, you should be able to get back on track, but if your business has failed, that will make it much more difficult.
Like any loan, the more payments you miss, the more aggressive collections practices your lender will attempt. Those practices will also change depending on the amount you own or how long you have been missing payments.
If your loan is backed by collateral, like your business equipment, the lender may take that equipment to recoup some of the money you owe. If your business has failed, you may be able to cover the amount of money you owe by selling off your assets, since you no longer need them to run your business.
If you have made a personal guarantee on your business loan, then the stakes are even higher. A personal guarantee means that you personally are responsible for repaying the loan, even if your business has failed and cannot pay back the loan. Depending on the situation, your lender can come after your personal assets rather than just the business assets.
An SBA loan has a different process than other types of business loans, and the lender will submit a claim to the Small Business Administration after collecting the collateral associated with the loan. The SBA will pay the lender for the portion of the loan that they have guaranteed, and then contact you to create a plan for repaying your debt with the SBA directly. The SBA guarantees up to 75% to 85% of business loans, and You may be able to negotiate a smaller payment, and our SBA lawyers can help make that possible.
If your business has failed and you are feeling overwhelmed by debt, our debt attorneys are here to help. We can provide you with realistic solutions to SBA loan problems and get you back on track. We look forward to working with you and helping you through this stressful period!
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 personally guaranteed SBA 7(a) loan balance of $58,000. The client received a notice of Intent to initiate Administrative Wage Garnishment (AWG) Proceedings. We represented the client at the hearing and successfully defeated the AWG Order based on several legal and equitable grounds.
Our firm successfully assisted a client in closing an SBA Disaster Loan tied to a COVID-19 Economic Injury Disaster Loan (EIDL). The borrower obtained an EIDL loan of $153,800, but due to the prolonged economic impact of the COVID-19 pandemic, the business was unable to recover and ultimately closed.
As part of the business closure review and audit, we worked closely with the SBA to negotiate a resolution. The borrower was required to pay only $1,625 to release the remaining collateral, effectively closing the matter without further financial liability for the owner/officer.
This case highlights the importance of strategic negotiations when dealing with SBA settlements, particularly for businesses that have shut down due to unforeseen economic challenges. If you or your business are struggling with SBA loan debt, we focus on SBA Offer in Compromise (SBA OIC) solutions to help settle outstanding obligations efficiently.
Client personally guaranteed an SBA 7(a) loan for $100,000 from the lender. The SBA loan went into early default in 2006 less than 12 months from disbursement. The SBA paid the 7(a) guaranty monies to the lender and subsequently acquired the deficiency balance of about $96,000, including the right to collect against the guarantor. However, the SBA sent the Official 60-Day Due Process Notice to the Client's defunct business address instead of his personal residence, which he never received. As a result, the debt was transferred to Treasury's Bureau of Fiscal Service where substantial collection fees were assessed, including accrued interest per the promissory note. Treasury eventually referred the debt to a Private Collection Agency (PCA) - Pioneer Credit Recovery, Inc. Pioneer sent a demand letter claiming a debt balance of almost $310,000 - a shocking 223% increase from the original loan amount assigned to the SBA. Client's social security disability benefits were seized through the Treasury Offset Program (TOP). Client hired the Firm to represent him as the debt continued to snowball despite seizure of his social security benefits and federal tax refunds as the involuntary payments were first applied to Treasury's collection fees, then to accrued interest with minimal allocation to the SBA principal balance.
We initially submitted a Cross-Servicing Dispute (CSD) challenging the referral of the debt to Treasury based on the defective notice sent to the defunct business address. Despite overwhelming evidence proving a violation of the Client's Due Process rights, the SBA still rejected the CSD. As a result, an Appeals Petition was filed with the SBA Office of Hearings & Appeals (OHA) Court challenging the SBA decision and its certification the debt was legally enforceable in the amount claimed. After several months of litigation before the SBA OHA Court, our Firm Attorney successfully negotiated an Offer in Compromise (OIC) Term Workout with the SBA Supervising Trial Attorney for $82,000 spread over a term of 74 months at a significantly reduced interest rate saving the Client an estimated $241,000 in Treasury collection fees, accrued interest (contract interest rate and Current Value of Funds Rate (CVFR)), and the PCA contingency fee.
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