Learn how business loans and SBA loan forgiveness can affect your personal credit with Protect Law Group's expert guidance.
Book a Consultation CallWhen it comes to obtaining a business loan, one common concern that business owners often have is whether taking out a business loan will impact their personal credit report. This is a crucial question because maintaining a good personal credit score is essential for both financial stability and future opportunities. Protect Law Group understands the importance of this issue and aims to provide comprehensive insights into the relationship between business loans, SBA loans, and SBA loan forgiveness in regard to personal credit reports. Here is some helpful information about business loans and your personal credit report.
Securing a business loan is a significant milestone for entrepreneurs looking to start or expand their businesses. One key aspect that sets business loans apart from personal loans is how they are reported. Generally, business loans from traditional lenders or backed by the SBA are not reported on personal credit reports. Instead, business credit bureaus track these loans separately, helping business owners maintain a separation between their personal and business financial obligations.
Small Business Administration (SBA) loans are known for offering competitive interest rates, long repayment terms, and lower down payments, making them an attractive financing option for small businesses. One of the advantages of SBA loans is they do not directly impact the personal credit of business owners. This allows entrepreneurs to access the capital they need to grow their businesses while protecting their personal credit scores.
As businesses navigate the challenges of economic uncertainty, SBA loan forgiveness has become a critical lifeline for many entrepreneurs. However, it's essential to understand that forgiven SBA loans may have implications on personal credit if the forgiven amount is considered taxable income. This underscores the importance of strategic financial planning and tax management to mitigate any potential adverse effects on personal credit scores.
At Protect Law Group, we specialize in guiding businesses through the complexities of business loans, SBA loans, and loan forgiveness. Our experienced team provides personalized advice and strategic solutions to help business owners make informed decisions that align with their financial goals. By partnering with Protect Law Group, you can navigate the intricacies of business financing with confidence and clarity. Contact our SBA Attorneys today!
To sum it all up, the relationship between business loans, SBA loans, and personal credit reports is a nuanced one. While business loans typically do not appear on personal credit reports, it's crucial for business owners to be aware of the potential implications of SBA loan forgiveness on their personal credit. By working with Protect Law Group, you can access the expertise and guidance needed to make sound financial decisions and safeguard your personal credit standing.
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.
Clients obtained an SBA 7(a) loan for $324,000 to buy a small business and its facility. The business and real estate had an appraisal value of $318,000 at the time of purchase. The business ultimately failed but the participating lender abandoned the business equipment and real estate collateral even though it had valid security liens. As a result, the lender recouped nearly nothing from the pledged collateral, leaving the business owners liable for the deficiency balance. The SBA paid the lender the 7(a) guaranty money and was assigned ownership of the debt, including the right to collect. However, the clients never received the SBA Official 60-Day Notice and were denied the opportunity to negotiate an Offer in Compromise (OIC) or a Workout directly with the SBA before being transferred to Treasury's Bureau of Fiscal Service, which added an additional $80,000 in collection fees. Treasury garnished and offset the clients' wages, federal salary and social security benefits. When the clients tried to negotiate with Treasury by themselves, they were offered an unaffordable repayment plan which would have caused severe financial hardship. Clients subsequently hired the Firm to litigate an Appeals Petition before the SBA Office & Hearings Appeals (OHA) challenging the legal enforceability and amount of the debt. The Firm successfully negotiated a term OIC that was approved by the SBA Office of General Counsel, saving the clients approximately $205,000.
Client personally guaranteed SBA 7(a) loan for $150,000. COVID-19 caused the business to fail, and the loan went into default with a balance of $133,000. Client initially hired a non-attorney consultant to negotiate an OIC. The SBA summarily rejected the ineligible OIC and the debt was referred to Treasury’sBureau of Fiscal Service for enforced collection in the debt amount of $195,000. We were hired to intervene and initiated discovery for SBA and Fiscal Service records. We were able to recall the case from Fiscal Service back to the SBA. We then negotiated a structured workout with favorable terms that saves the client approximately $198,000 over the agreed-upon workout term by waiving contractual and statutory administrative fees, collection costs, penalties, and interest.
Clients' 7(a) loan was referred to Treasury's Bureau of Fiscal Service for enforced collection in 2015. They not only personally guaranteed the loan, but also pledged their primary residence as additional collateral. One of the clients filed for Chapter 7 bankruptcy thinking that it would discharge the SBA 7(a) lien encumbering their home. They later discovered that they were mistakenly advised. The Firm was subsequently hired to review their case and defend against a series of collection actions. Eventually, we were able to negotiate a structured workout for $180,000 directly with the SBA, saving them approximately $250,000 (by reducing the default interest rate and removing Treasury's substantial collection fees) and from possible foreclosure.
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