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.