Navigating SBA Offer in Compromise: A Step-by-Step Guide
Dealing with SBA Bankruptcy? A SBA offer in compromise may help get you out of this difficult situation. Protect Law Group is here to help. Find out more today!
Better understand the approval process for an SBA Offer in Compromise (OIC). Explore SBA loan forgiveness with Protect Law Group. Contact us!
Book a Consultation CallWhen facing financial challenges due to Small Business Administration (SBA) loans, it is essential to explore all available options to minimize damage to your business or personal assets. One such option is the SBA Offer in Compromise (OIC), which aims to settle SBA debt with your lender. While you’ll still be responsible for a smaller portion of the loan, an Offer in Compromise will settle the entirety of your loan.
Today, our SBA loan attorney is here to discuss the factors considered in the approval of an OIC and how it can provide concrete solutions for small businesses seeking debt relief.
The first step in the approval process for an OIC is a comprehensive evaluation of the applicant's financial status. This assessment analyzes the business's income, assets, liabilities, and overall financial viability. The Small Business Administration assesses the applicant's ability to pay back the debt without adversely affecting their current financial situation.
To qualify for an OIC, the applicant must demonstrate their inability to repay the SBA loan in full. This requires presenting evidence of economic hardship, such as declining revenues, increased operating costs, or unforeseen circumstances like a natural disaster or economic downturn.
Determining the offer amount plays a crucial role in the approval of an OIC. The Small Business Administration carefully evaluates the applicant's financial information to arrive at a reasonable offer that considers their ability to pay and the outstanding debt balance. Factors such as current assets, future earnings potential, and available cash flow are taken into account during this calculation.
Applicants must adhere to the guidelines set by the SBA when submitting an OIC. This includes providing accurate and complete financial documentation, responding promptly to inquiries, and demonstrating a genuine intent to settle the debt. Compliance with these guidelines increases the chances of approval.
Having knowledgeable and experienced legal representation can significantly impact the approval process of an OIC. Working with attorneys specializing in SBA debt relief ensures proper preparation of the OIC, accurate calculations, and effective negotiation strategies. Professional representation can increase the likelihood of a favorable outcome.
Obtaining approval for an SBA Offer in Compromise requires careful consideration of multiple factors. By conducting a thorough financial assessment, demonstrating economic hardship, calculating a fair offer amount, complying with guidelines, and seeking professional representation, small businesses can significantly increase their chances of debt settlement and obtain much-needed relief.
At Protect Law Group, we specialize in helping our clients navigate the intricate approval process for an OIC, ensuring the best possible outcome for their SBA debt issues. If you are located in San Diego, Orange, or Los Angeles County, let our team provide you with concrete solutions and guide you toward a better financial future. Contact us today!
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.
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.
Our firm successfully resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) in the original amount of $150,000 for a Florida-based borrower. The loan, issued on June 4, 2020, was secured by business assets and potential personal liability through the SBA's Security Agreement.
Following the permanent closure of the business, we guided the client through the SBA’s Business Closure Review process and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the business collateral for $2,910 — satisfying the borrower’s obligations under the Security Agreement and eliminating any further enforcement risk against the pledged assets.
Client's small business obtained an SBA COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement. The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.
The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.
The Firm was hired to investigate and find an alternate solution to the bankruptcy option. After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.
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