Pros and Cons of SBA Loan Modification
Discover the pros & cons of SBA loan modification with Protect Law Group. Expert SBA debt relief help for small businesses. Take control 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.
Clients personally guaranteed SBA 7(a) loan balance of over $300,000. Clients also pledged their homes as additional collateral. SBA OIC accepted $87,000 with the full lien release against the home.
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.
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.
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