Small businesses could face serious financial issues that could lead to a SBA loan default. If this occurs, the lender is within their rights to file for a foreclosure. Once this begins, the business owner could face difficulty stopping it. A SBA Offer in Compromise could provide an opportunity to prevent the serious impact on the business owner's credit rating.
These offers are a settlement offered to the lender that is lower than the total outstanding balance. An attorney provides the borrower with an appropriate percentage to offer to the lender. They prepare the documentation of the settlement and submit to the lender. By representing the borrower, they help the business owner protect their business against further negative actions.
The first step for the business owner is to approach an attorney as soon as they receive the SBA demand letter. Once they receive the letter, they have a deadline assigned. The borrower must take action before this deadline or face immediate foreclosure. This could shut down their company entirely. It could also prevent them from acquiring a new business location in the future. Once the foreclosure occurs, the business owner is still responsible for the debt.
The attorney presents the settlement offer to the lender. They negotiate the settlement and may increase the percentage required. These loans are guaranteed by the Small Business Administration and require the business owner to submit a portion of the outstanding balance. The attorney works with the lender to determine a fair value and presents this value to the business owner.
Once the lender accepts the settlement, the remaining balance is written off. The attorney could help the business owner offset any additional taxes or fees. This could present the business owner with the most appropriate solution to stop the SBA loan foreclosure now.
Small business owners should take action when they receive a notification of default. A default gives their lender the right to file for a foreclosure and seize their property. For most small business owners, seizure could lead to a total shutdown of their business. Owners who need to acquire a settlement or Tax Offset Program should contact an attorney now.
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.
Our firm successfully assisted a client in closing an SBA Disaster Loan tied to a COVID-19 Economic Injury Disaster Loan (EIDL). The borrower obtained an EIDL loan of $153,800, but due to the prolonged economic impact of the COVID-19 pandemic, the business was unable to recover and ultimately closed.
As part of the business closure review and audit, we worked closely with the SBA to negotiate a resolution. The borrower was required to pay only $1,625 to release the remaining collateral, effectively closing the matter without further financial liability for the owner/officer.
This case highlights the importance of strategic negotiations when dealing with SBA settlements, particularly for businesses that have shut down due to unforeseen economic challenges. If you or your business are struggling with SBA loan debt, we focus on SBA Offer in Compromise (SBA OIC) solutions to help settle outstanding obligations efficiently.
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 facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) f borrower received an SBA disaster loan of $150,000, but due to the severe economic impact of the COVID-19 pandemic, the business was unable to recover.
Despite the borrower’s efforts to maintain operations, shutdowns and restrictions significantly reduced the customer base and revenue, making continued operations unsustainable. After a thorough business closure review, we negotiated with the SBA, securing a resolution where the borrower paid only $6,015 to release the collateral, with no further financial liability for the owner/officer.
This case demonstrates how businesses affected by the pandemic can navigate SBA loan settlements effectively. If your business is struggling with an SBA EIDL loan, we specialize in SBA Offer in Compromise (SBA OIC) solutions to help close outstanding debts while minimizing financial burden.
.jpg)
