How Much of Your Paycheck Can Be Garnished for a Defaulted SBA Loan?
Learn about the wage garnishment limits for defaulted SBA loans, including how much of your paycheck can be taken, and explore legal protections and repayment options.
Are you ready to apply for a business loan for your company? Review our need to know business terms so you know what you are getting out of your loan.
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Do you know that a large number of loan applicants sign the paperwork without understanding the business terms?
Before you submit your business loan application form, read this guide to understand the common terms used by lenders. It’ll help you apply for the best business loan and understand the lingo used by most lenders
Interestingly, business loans can stretch for a few weeks to 25 years. In this industry, the word "terms" ordinarily alludes to the amount of time taken to reimburse the loan and interest to the lender.
Let me take you via some of the details of the loan terms and terminologies. They’ll help you know what you’re getting into when applying for a loan.
Behind SBA loans, these loans range from 3 to 10 years and come with the longest finance terms. They’re not easy to qualify and are not accessed by most small business owners.
These provides the longest loan terms in the business market. Loan terms in this category depend on the SBA loan programs they are lent through. Below are the three familiar SBA loan programs:
Similarly, this is another type of funding that provides prolonged business loan terms and covers one to five years. However, despite being applied via optional lenders, medium-term loans function like traditional bank loans. Their loan term provides a longer repayment period as compared to several other online business credit alternatives.
Do you know invoice financing provides extremely short-term solutions to business people? Its finance terms cover 3 to 6 months, and outstanding invoices secure the funding.
Usually, the loan term is determined by the amount of time taken by the customer to fulfill the invoice. As a result, invoice financing firms accept three to six weeks of outstanding invoices.
As the name implies, these range from 3 to 18 months. You’ll have a lower cost of capital and provides small amounts of loans that are quicker time-to-fund. Short-term loans are impacted by the year or less repayment term.
This can be medium-term or short-term in nature. Hence, the usual loan term you see attached to credit business line varies broadly from 6 months to 5 years.
Are you aware that the equipment bought with this funding secures equipment financing? Also, its common finance terms usually are longer.
The built-in collateral means: lenders take less risk — the loan covers from 2 to 5 years.
These have no business loan terms. They are repaid via a day-to-day percentage of the business card revenues. The advance firm claims the daily percentage until the whole debt is cleared.
With the fluctuating daily payment, it’s hard to tell the period taken by the merchant cash advance. But do you know this has some of the shortest loan terms in the industry?
That’s due to the daily payments. Normally, borrowers repay their loan for a period of 4 to 18 months.
During the process of searching for the right business loan, you’ll come across some terminologies as highlighted below.
This takes note of the entire cash inflows and outflows from your business during a specific period.
It’s a pre-determined time after the due date of loan payment given without incurring late charges.
Moreover, the type of business entity constitutes the category your business falls legally. Entity type influences how your business functions under the law.
Do you know with collateral you have high chances of qualifying for funding and get better business loan terms?
Collateral consists of tangible and intangible property owned by an individual or business. It may include financial accounts, equipment, vehicles, real estate, etc. Businesses use collateral in two ways:
When utilized in the business loan term, it refers to loans with no collateral backing. However, unsecured debt results in bigger risks to the lender. They’re also not easy to qualify.
By underwriting your application, the lender accesses the risk of loaning you. It involves the decisions of whether to lend or not.
Commonly known as "current liability", accounts payable constitutes a business loan term that alludes to short-term debt that you’re needed to clear soon. It denotes what’s owned by your business.
This refers to the reimbursements you’re owned. They make up outstanding invoices and allude to what your trade is owed.
In business finance terms, it refers to how borrowers pay off their business loans. For amortized loans, borrowers make scheduled and equal payments until the principal and interest is paid.
Consolidating your debts means paying multiple loans with the money you got from a single loan.
Debt financing means way of business financing or a loan that necessitates you to repay the principal amount and interest over time.
It’s a contract signed when you agree to take the loan. The loan agreement delineates the loan terms.
A loan matures after making the last loan payment. That’s after full clearing of the principal and interest.
Unlike a fixed interest rate, this differs from the market interest rates during the business loan span.
It’s a borrower who is termed as a higher risk.
Signing to a blanket lien loan gives powers to the lender to seize any of your business property if the debt is not cleared.
Refinancing your debt involves paying off your loan with another better loan. It saves your huge business cash with the avoided interest.
What do you know about working capital? It’s the entire capital utilized in day-to-day transactions in your business. It's the amount of cash in your business minus the expenses.
If you are seeking to work out or modify your SBA loan with lenders, get in touch with us. We’ll walk you through common business terms.
In the business arena, we’ll get the world at your fingertips as we offer you the most important loan details.
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.
Clients obtained an SBA 7(a) loan for their small business in the amount of $298,000. They pledged their primary residence and personal guarantees as direct collateral for the loan. The business failed, the lender was paid the 7(a) guaranty money and the debt was assigned to the SBA. Clients received the Official 60-Day Notice giving them a couple of options to resolve the debt balance directly with the SBA before referral to Treasury's Bureau of Fiscal Service. The risk of referral to Treasury would add nearly $95,000 to the SBA principal loan balance. With the default interest rate at 7.5%, the amount of money to pay toward interest was projected at $198,600. Clients hired the Firm with only 4 days left to respond to the 60-Day due process notice. Because the clients were not eligible for an Offer in Compromise (OIC) due to the significant equity in their home and the SBA lien encumbering it, the Firm Attorneys proposed a Structured Workout to resolve the SBA debt. After back and forth negotiations, the SBA Loan Specialist assigned to the case approved the Workout terms which prevented potential foreclosure of their home, but also saved the clients approximately $294,000 over the agreed-upon Workout term with a waiver of all contractual and statutory administrative fees, collection costs, penalties, and interest.
Client’s small business obtained an SBA 7(a) loan for $750,000. She and her husband signed personal guarantees exposing all of their non-exempt income and assets. With just 18 months left on the maturity date and payment on the remaining balance, the Great Recession of 2008 hit, which ultimately caused the business to fail and default on the loan terms. The 7(a) lender accelerated and sent a demand for full payment of the remaining loan balance. The SBA lender’s note allowed for a default interest rate of about 7% per year. In response to the lender's aggressive collection action, Client's husband filed for Chapter 7 bankruptcy in an attempt to protect against their personal assets. However, his bankruptcy discharge did not relieve the Client's personal guarantee liability for the SBA debt. The SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection against the Client to the SBA. The Client then received the SBA Official 60-Day Notice. After conducting a Case Evaluation with her, she then hired the Firm to respond and negotiate on her behalf with just 34 days left before the impending referral to Treasury. The Client wanted to dispute the SBA’s alleged debt balance as stated in the 60-Day Notice by claiming the 7(a) lender failed to liquidate business collateral in a commercially reasonable manner - which if done properly - proceeds would have paid back the entire debt balance. However, due to time constraints, waivers contained in the SBA loan instruments, including the fact the Client was not able to inspect the SBA's records for investigation purposes before the remaining deadline, Client agreed to submit a Structured Workout for the alleged balance in response to the Official 60-Day Notice as she was not eligible for an Offer in Compromise (OIC) because of equity in non-exempt income and assets. After back and forth negotiations, the SBA Loan Specialist approved the Workout proposal, reducing the Client's purported liability by nearly $142,142.27 in accrued interest, and statutory collection fees. Without the Firm's intervention and subsequent approval of the Workout proposal, the Client's debt amount (with accrued interest, Treasury's statutory collection fee and Treasury's interest based on the Current Value of Funds Rate (CVFR) would have been nearly $291,030.
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 his 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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