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Is There a Statute of Limitations on SBA Loans?

Yes, there is a statute of limitations that applies to defaulted SBA loans. But the government can still collect from you.

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Is There a Statute of Limitations on SBA Loans?

Yes, there is a statute of limitations that applies to defaulted SBA loans.  But the government can still collect from you.

Statute of limitations for SBA loan

The Federal Government is Limited to a 6 Year Statute of Limitations on Defaulted SBA Loans

When your business obtains an SBA loan, you sign a personal guarantee, which means that you agree to be personally liable for the debt of your business should it default.

The law specifically states that every action for money damages brought by the United States or an officer or agency thereof which is founded upon any contract express or implied in law or fact, shall be barred unless the complaint is filed within six years after the right of action accrues or within one year after final decisions have been rendered.

Therefore, if the government fails to bring suit against you within 6 years from the date its right to sue for breach of contract starts, it cannot sue you for the debt.

However, the Government Can Still Collect From You Through "Offset"

Unless Congress explicitly provides for a limitations period, federal agencies, including the SBA, will not be time barred from collecting their debts through any means, including offset. In general, there is no

statute of limitations for offset.   Offset is the process where the government takes all or some of payments you receive from it.

Even when a statute of limitations for pursuing a civil action has expired, the United States can still collect via offset.  Therefore, the SBA can collect against you by taking your tax refund or part of your Social Security, disability, military pension and other government benefits.  Moreover, the SBA can take the full amount of some other payments such as travel reimbursements from the government, rent from a government rented building you own, etc.  If you are a federal employee, you may have up to 15% of your pay offset.

The Government Can Also Garnish Your Wages

Administrative wage garnishment (AWG) is a process in which a federal agency may collect delinquent SBA debt by garnishing the wages of a delinquent debtor without first obtaining a court order.  You do have an opportunity for a hearing and to present evidence.

But, as with the offsets addressed above, no statute of limitations exists to prohibit the government from garnishing your wages. Even if state law provides for a limitations period, it does not apply to the federal government. This means even if you defaulted on your SBA loan 10 years ago, the government can still garnish your wages.

You Have Options Available With Your SBA Loan

Protect Law Group can provide you with options to deal with an SBA loan default before the government sues or otherwise tries to take your hard earned money.  An offer in compromise, where you pay a fraction of the debt as a settlement, or a payment plan may provide available options.

Contact Protect Law Group Today If You Are Facing an SBA Debt

Don't let the federal government take your money.  Our experienced and aggressive attorneys can provide you with solutions to your SBA loan default problem.  Contact us today for a free initial case evaluation.

Why Hire Us to Help You with Your Treasury or SBA Debt Problems?

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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

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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

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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.



Clients personally guaranteed SBA 504 loan balance of $750,000.  Clients also pledged the business’s equipment/inventory and their home as additional collateral.  Clients had agreed to a voluntary sale of their home to pay down the balance.  We intervened and rejected the proposed home sale.  Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.



Clients personally guaranteed an SBA 7(a) loan that was referred to the Department of Treasury for collection.  Treasury claimed our clients owed over $220,000 once it added its statutory collection fees and interest.  We were able to negotiate a significant reduction of the total claimed amount from $220,000 to $119,000, saving the clients over $100,000 by arguing for a waiver of the statutory 28%-30% administrative fees and costs.

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