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Legal Enforceability Challenge To An SBA Debt: Prove The Lender Failed To Disclose Material Facts & Argue The SBA Guaranty Should Never Have Been Paid In The First Place

We help people who need to avoid SBA debt by teaching them about SBA offer in compromise and about various SBA loan problems.

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Legal Enforceability Challenge To An SBA Debt: Prove The Lender Failed To Disclose Material Facts & Argue The SBA Guaranty Should Never Have Been Paid In The First Place

We provide individuals who are facing either SBA Personal Guarantees, SBA loan default or DOT collection action with solutions. For instance, we help you understand different SBA loan problems or Treasury Department collection actions and teach you about either the SBA offer in compromise or DOT compromise package.

The SBA’s Inspector General Office (SBA OIG) recently released a performance audit critical of the SBA 7(a) guaranty approval process.

The report recommended ways for SBA to do a better job in approving SBA 7(a) loans. If you are interest in delving into the details of SBA staffing issues, training issues and risk mitigation strategies, feel free to click on the attached report: Audit Report 14-13: Significant Opportunities Exist to Improve the Management of the 7(a) Loan Guaranty Approval Process

The SBA OIG’s audit ruled a number of loans ineligible for SBA financing, (for e.g., the SBA Guaranty will be denied and the lender will absorb the entire loss regarding the SBA debt).

For example, here is one case study:

SBA’s Loan Guaranty Processing Center in Citrus Heights approved a $98,550 SBA 7(a) loan in 2012.

The borrower was the prospective owner of a restaurant. However, the lender failed to disclose to the SBA that the previous restaurant on the same property had outstanding delinquent SBA loans. And the equipment, leasehold improvements and inventory were now owned by the lender.

The SBA OIG concluded that, “this transaction put the SBA at risk. The SBA ended up with two loans in liquidation with a total outstanding balance of $43,674 and the $98,550 subject loans, which were all associated to the same property.

According to applicable Code of Federal Regulations (CFR), the SBA is released from liability on a loan guaranty if the lender’s improper action or inaction has placed the SBA at risk or the lender has failed to disclose a material fact to the SBA regarding a guaranteed loan in a timely manner.

The SBA OIG found that the borrower was essentially going to be operating the same business and hours as the previous failed restaurant. Therefore, disclosing that the previous restaurant was financed by an SBA loan and had defaulted was critical to SBA’s approval decision.  As such, it was determined this loan was ineligible for SBA financing.

Dealing with the idea that you might be facing SBA debt can be terrifying. The SBA attorneys in our office are skilled at helping clients understand all of the facets of their situations. 

The attorneys in our office want to help you figure out your SBA debt or DOT debt. No matter how difficult your circumstances may seem, the right lawyer can assist you. We understand that you probably have questions regarding a wide range of issues, including how to respond to an SBA or DOT demand letter, what SBA loan foreclosure actually entails, and what a tax offset program is. One of our specialists can tell you about all of these topics and more. We urge you to read our blog to learn more about subjects that are confusing to you and to contact us right away if you have specific questions. We look forward to working with you during this period of your life.

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.

$337,000 SBA 504 LOAN - SBA OIC CASH SETTLEMENT

$337,000 SBA 504 LOAN - SBA OIC CASH SETTLEMENT

Clients personally guaranteed SBA 504 loan balance of $337,000.  The Third Party Lender had obtained a Judgment against the clients.  We represented clients before the SBA and negotiated an SBA OIC that was accepted for $30,000.

$505,000 SBA 7(A) LOAN - FEDERAL DISTRICT COURT LITIGATION (CALIFORNIA)

$505,000 SBA 7(A) LOAN - FEDERAL DISTRICT COURT LITIGATION (CALIFORNIA)

Clients borrowed and personally guaranteed an SBA 7a 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.

$1,200,000 SBA 7A LOAN - SBA OHA LITIGATION

$1,200,000 SBA 7A LOAN - SBA OHA LITIGATION

Client personally guaranteed an SBA 7(a) loan to help with a relative’s new business venture.  After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against our client’s monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars.  We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA).  As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy), but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.

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