When 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.
Demonstrating Economic Hardship
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.
Offer Amount Calculation
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.
Compliance With SBA Guidelines
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.
Work Towards SBA Loan Forgiveness Today
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!
Why Hire Us to Help You with Your Treasury or SBA Debt Problems?
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.
$488,000 SBA 7A LOAN - SBA OHA LITIGATION
Clients personally guaranteed an SBA 7(a) loan. The SBA referred the debt to the Department of Treasury, which was seeking payment of $487,981 from our clients. We initially filed a Cross-Servicing Dispute, which was denied. As a result, we filed an Appeals Petition with the SBA Office of Hearings and Appeals asserting legal defenses and supporting evidence uncovered during the discovery and investigation phase of our services. Ultimately, the SBA settled the debt for $25,000 - saving our clients approximately $462,981.
$150,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT
Client personally guaranteed SBA 7(a) loan balance of over $150,000. Business failed and eventually shut down. SBA then pursued client for the balance. We intervened and was able to present an SBA OIC that was accepted for $30,000.
$505,000 SBA 7A LOAN - FEDERAL DISTRICT COURT LITIGATION (CALIFORNIA)
Clients borrowed and personally guaranteed an SBA 7(a) loan. Clients defaulted on the SBA loan and were sued in federal district court for breach of contract. The SBA lender demanded the Client pledge several personal real estate properties as collateral to reinstate and secure the defaulted SBA loan. We were subsequently hired to intervene and aggressively defend the lawsuit. After several months of litigation, our attorneys negotiated a reinstatement of the SBA loan and a structured workout that did not involve any liens against the Client's personal real estate holdings.