Navigating SBA Loan Programs
Are you interested in learning more about the various types of SBA Loan Programs? Protect Law Group is here to keep you informed. Learn more today!
Below are excerpts from the United States Attorneys' Manual relating to several key policy treatment by the Department of Justice lawyers with respect to non-tax federal debts, such as SBA debts.
Key provisions that SBA debtors should, at the very least, familiarize themselves with are noted below:
Commencing on October 1, 1990, all federal agencies are required to refer claims when the principle amount is $1,000,000 or less for litigation or debt enforcement to the Department of Justice through the Nationwide Central Intake Facility. The Nationwide Central Intake Facility acknowledges receipt of the claim, provides a limited review of the Claims Collection Litigation Report (CCLR) for compliance with the Federal Claims Collection Standards, and forwards the information to the appropriate United States Attorney's office for litigation. Federal agencies are not required to send the following types of cases to the Nationwide Central Intake Facility: anti-trust cases; environment and natural resources cases; tax cases; fraud cases; interagency claims; renewal of judgment lien only cases; and if the agency is seeking Department of Justice concurrence on an agency's proposal to suspend or terminate action to collect a claim.In cases where time is of the essence in securing the government's position, the agency may send a referral directly to the United States Attorney's office with a copy of the CCLR to the Nationwide Central Intake Facility. If the Financial Litigation Unit receives a referral package directly from an agency, or they are requested to enforce a civil judgment from another division within the United States Attorney's office that has not been previously docketed by the Nationwide Central Intake Facility, Financial Litigation Unit personnel shall provide data on the referral by completing and mailing the "Nationwide Case Initiation Sheet" to the Nationwide Central Intake Facility.
see link: https://www.justice.gov/usao/eousa/foia_reading_room/usam/title3/10musa.htm#3-10.120
The Federal Claims Collection Standards (4 C.F.R. Parts 101 to 105) prescribe regulations which agencies must follow to collect, compromise and suspend or terminate collection action on their claims. Agencies are required to provide certain information to the Department of Justice when referring claims for litigation and enforced collection. See 4 C.F.R. § 105.1 et seq. The Financial Litigation Staff, with the support and cooperation of the General Accounting Office, developed the Claims Collection Litigation Report (CCLR) as the standard report to convey this information.Unless an exception has been granted by the Financial Litigation Staff, agencies are required to provide a completed CCLR with each claim they refer. See 4 C.F.R. §105.2. United States Attorneys' offices are responsible for ensuring that CCLRs comply with the requirements set forth in Federal Claims Collection Standards. These requirements should be addressed with local agency representatives when claims are referred without the CCLR, or when the CCLRs provided are inadequate. The Deputy Director, Legal Programs, should be advised of any problems which cannot be resolved or continue to persist at the local level.Some information requested on the CCLR may be superfluous to a particular agency's claim or impossible for the agency to obtain. The agency's inability to obtain all information required on the CCLR should not be viewed as a bar to the referral of a claim for litigation. However, information requested on the CCLR should be provided to the extent feasible and any omissions by the agency should be noted throughout the CCLR.The Federal Claims Collection Standards also provide that once a claim has been referred to the Department of Justice, the referring agency shall refrain from having any contact with the debtor and shall direct the debtor to the United States Attorney on any matters concerning the claim. The Standards further provide that the United States Attorney shall be immediately notified by the referring agency of any payments which are received from the debtor subsequent to referral of a claim. See 4 C.F.R. §105.1(d).
see link: https://www.justice.gov/usao/eousa/foia_reading_room/usam/title3/10musa.htm#3-10.130
A compromise is an agreement to accept less than the total amount owing in principal interest, and administrative costs in civil cases. Criminal cases (with the exception of bail bond forfeitures) cannot be compromised. Compromises are accepted only when it is not in the best interest of the government to pursue the full amount of the debt. Pursuant to Title 4, Code of Federal Regulations (C.F.R.), Section 103.2, the factors to consider include: (1) the debtor's inability to pay the full amount within a reasonable time; or (2) the refusal of the debtor to pay the claim in full and the government's inability to enforce collection in full within a reasonable time by enforced collection proceedings.Pursuant to 28 C.F.R., Part O, Subpart Y, Civil Division Directive 14-95, compromises must be approved by a supervisory Assistant United States Attorneys.A claim or judgment should only be compromised with agency approval. Whenever a claim is compromised, the full compromised debt should be collected in a lump sum. Any agreement to accept several payments must provide for payment of the full compromise amount within 90 days. If several payments are agreed to with full payment within 90 days, the government's claim must be secured by the entry of a judgment.Following payment of a compromised amount, the Financial Litigation Unit shall promptly send the client agency a notice of compromise and a closing letter. The letter will document for the agency the reason(s) why the claim was compromised and inform it of the total amount recovered.
see link: https://www.justice.gov/usao/eousa/foia_reading_room/usam/title3/10musa.htm#3-10.180
An installment payment plan shall be established only when the debtor is unable to make payment in full, or to obtain suitable financing from a private institution in order to make payment in full. Establishment of an installment payment plan shall not be considered unless and until a financial statement has been fully completed and signed by the debtor. Under no circumstances shall an installment payment plan be agreed to, or the terms and conditions of any plan be discussed, with the debtor prior to receiving a financial statement. All financial information provided must first be reviewed by Financial Litigation Unit personnel to determine whether a payment plan would be appropriate and, if so, to ensure that the maximum monthly payment amount is obtained and the judgment is liquidated at the earliest possible date.
see link: https://www.justice.gov/usao/eousa/foia_reading_room/usam/title3/10musa.htm#3-10.300
If you are struggling with circumstances that involve SBA loan default, you deserve professional representation! Our attorneys all know how to handle SBA OIC and DOT compromise cases. If you contact us, we can help you settle SBA debt or DOT debt once and for all. After you schedule an appointment, you consult with a dedicated SBA OIC lawyer or United States Treasury Dept Practitioner who can help you through your administrative legal battle. Once your claim is resolved, you won't have to worry about your SBA loan default or DOT debt problem haunting you. Our team of battle-tested SBA workout attorneys and DOT practitioners has assisted many federal debtors throughout the years. Now it is your turn! You truly can settle SBA debt or DOT debt for good!
Contact us at 888-756-9969 or simply enter your information on your online Contact Form and arrange for a Case Evaluation with one of our SBA Workout Attorneys or DOT Practitioners.
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.
Client personally guaranteed SBA 7(a) loan balance of $58,000. The client received a notice of Intent to initiate Administrative Wage Garnishment (AWG) Proceedings. We represented the client at the hearing and successfully defeated the AWG Order based on several legal and equitable grounds.
Client personally guaranteed an SBA 7(a) loan for $100,000 from the lender. The SBA loan went into early default in 2006 less than 12 months from disbursement. The SBA paid the 7(a) guaranty monies to the lender and subsequently acquired the deficiency balance of about $96,000, including the right to collect against the guarantor. However, the SBA sent the Official 60-Day Due Process Notice to the Client's defunct business address instead of his personal residence, which he never received. As a result, the debt was transferred to Treasury's Bureau of Fiscal Service where substantial collection fees were assessed, including accrued interest per the promissory note. Treasury eventually referred the debt to a Private Collection Agency (PCA) - Pioneer Credit Recovery, Inc. Pioneer sent a demand letter claiming a debt balance of almost $310,000 - a shocking 223% increase from the original loan amount assigned to the SBA. Client's social security disability benefits were seized through the Treasury Offset Program (TOP). Client hired the Firm to represent him as the debt continued to snowball despite seizure of his social security benefits and federal tax refunds as the involuntary payments were first applied to Treasury's collection fees, then to accrued interest with minimal allocation to the SBA principal balance.
We initially submitted a Cross-Servicing Dispute (CSD) challenging the referral of the debt to Treasury based on the defective notice sent to the defunct business address. Despite overwhelming evidence proving a violation of the Client's Due Process rights, the SBA still rejected the CSD. As a result, an Appeals Petition was filed with the SBA Office of Hearings & Appeals (OHA) Court challenging the SBA decision and its certification the debt was legally enforceable in the amount claimed. After several months of litigation before the SBA OHA Court, our Firm Attorney successfully negotiated an Offer in Compromise (OIC) Term Workout with the SBA Supervising Trial Attorney for $82,000 spread over a term of 74 months at a significantly reduced interest rate saving the Client an estimated $241,000 in Treasury collection fees, accrued interest (contract interest rate and Current Value of Funds Rate (CVFR)), and the PCA contingency fee.
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.
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