Factors Considered in the Approval of an OIC
Better understand the approval process for an SBA Offer in Compromise (OIC). Explore SBA loan forgiveness with Protect Law Group. Contact us!
Factors That Can Affect the Success of an SBA Offer in Compromise Application
Book a Consultation CallIn today's challenging economic landscape, many small business owners find themselves struggling to meet their financial obligations, including paying off loans backed by the Small Business Administration (SBA). When facing financial hardship, one option to consider is an SBA Offer in Compromise (OIC) application. However, the success of such an application depends on various factors. In this article, we will explore these key factors that can significantly impact the outcome of your SBA OIC application.
Before delving into the factors that affect the success of your SBA OIC application, let's start by understanding what it entails. An SBA Offer in Compromise is a program that allows eligible small business owners to settle their SBA debt for less than the full amount owed. It is a lifeline for those who are struggling financially and unable to repay their loans in full.
Now, let's take a closer look at the factors that can determine whether your SBA OIC application is approved or denied.
One of the crucial elements in your SBA OIC application is documenting your financial hardship. The SBA will scrutinize your financial records, so it's essential to provide clear and comprehensive documentation of your financial situation. This should include income statements, bank statements, tax returns, and any other relevant financial records.
To convince the SBA that you are genuinely unable to pay your debt in full, you must present compelling evidence. This might include showing that your business has experienced a significant drop in revenue, increased expenses, or other circumstances that have affected your ability to make payments.
When applying for an SBA OIC, you must provide an accurate valuation of your business and personal assets. Overvaluing your assets can lead to your application being rejected. It's essential to provide a realistic assessment of your assets to support your case effectively.
The SBA OIC application process can be complex, with numerous forms to fill out and documents to submit. Any errors or omissions can delay the process or result in a denial. Ensure that you carefully follow the application instructions and double-check all information before submission.
Adhering to the SBA's guidelines and requirements is crucial. Failure to meet their specific criteria can lead to the rejection of your application. Familiarize yourself with the SBA's guidelines and consult with experts if needed to ensure compliance.
Consider seeking professional assistance from attorneys who are experienced in SBA OIC applications. They can help you navigate the complexities of the process, ensuring that your application is well-prepared and stands the best chance of approval.
Submitting your SBA OIC application promptly is vital. Delays can negatively impact your case, and it's essential to meet all deadlines specified by the SBA.
Show the SBA that you are acting in good faith by being cooperative and transparent throughout the application process. A willingness to work with the SBA can be viewed positively.
If you have filed for bankruptcy or are considering it, be aware that it can affect your SBA OIC application. Consult with legal counsel to understand how bankruptcy might impact your case.
Successful negotiation skills can play a crucial role in achieving a favorable outcome. Be prepared to engage in negotiations with the SBA to reach an agreement that benefits both parties.
Your SBA OIC application will be reviewed by SBA officials who will assess the merits of your submission. The thoroughness and accuracy of your application will influence their decision.
In case your SBA OIC application is denied, you have the option to request reconsideration. Understanding this process and seeking legal advice can be beneficial.
Keep in mind that settling your SBA debt through an OIC may impact your credit score. It's essential to weigh the potential consequences against the benefits of debt relief.
Maintaining open and honest communication with the SBA throughout the process is vital. Be prepared to provide additional information or clarification if requested.
Lastly, the SBA OIC process can be time-consuming. Be patient and persistent in pursuing your application. A well-prepared, persistent applicant may ultimately achieve a successful outcome.
Navigating the SBA OIC application process can be challenging, but understanding the factors that can affect its success is crucial. By documenting your financial hardship, providing accurate information, and seeking professional assistance when needed, you can improve your chances of a favorable outcome. Remember that patience and persistence are key, and even if your initial application is denied, there are avenues for reconsideration.
An SBA Offer in Compromise (OIC) is a program that allows eligible small business owners to settle their SBA debt (personal guarantee) for less than the full amount owed, providing relief to those facing financial hardship.
You can prove financial hardship by providing comprehensive documentation of your financial situation, including income statements, bank statements, tax returns, and other relevant records.
Yes, you have the option to request reconsideration. However, the chances are the initial decision will be confirmed.
Yes, settling your SBA debt through an OIC may have an impact on your credit score. It's essential to consider this when exploring your options.
Seeking professional assistance from attorneys who are experienced in SBA OIC applications can be beneficial, as they can help you navigate the complexities of the process and improve your chances of success.
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.
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.
Client personally guaranteed SBA 7(a) loan for $350,000. The small business failed but because of the personal guarantee liability, the client continued to pay the monthly principal & interest out-of-pocket draining his savings. The client hired a local attorney but quickly realized that he was not familiar with SBA-backed loans or their standard operating procedures. Our firm was subsequently hired after the client received the SBA's official 60-day notice. After back-and-forth negotiations, we were able to convince the SBA to reinstate the loan, retract the acceleration of the outstanding balance, modify the original terms, and approve a structured workout reducing the interest rate from 7.75% to 0% and extending the maturity date for a longer period to make the monthly payments affordable. In conclusion, not only we were able to help the client avoid litigation and bankruptcy, but our SBA lawyers also saved him approximately $227,945 over the term of the workout.
.jpg)
