SBA Has Stopped Auto-Enrollment In The Hardship Accommodation Plan for COVID EIDL Loans
SBA COVID EIDL Loan Default? Learn about HAP, OIC, Workout or Bankruptcy
The federal shutdown is over and SBA & Treasury collections are resuming fast. Learn what to expect and how Protect Law Group can defend you before referrals to Treasury begin.
Book a Consultation CallThe federal government shutdown is officially over. During the shutdown, more than 670,000 federal employees were furloughed and 730,000 worked without pay (Bipartisan Policy Center). SBA and Treasury operations stalled, freezing billions in activity and creating significant backlogs.
This article explains what SBA debtors should expect now that enforcement has resumed.
The shutdown caused one of the largest SBA operational stoppages in modern history:
• SBA case processing froze
• FOIA discovery, OIC, Workout/Repayment and hardship requests paused
• Treasury cross-servicing referrals and collection action operated at reduced capacity
• Billions in lending & servicing actions stalled
While Treasury did not fully shut down, cross-servicing and enforced collection activity operated on reduced capacity.
SBA previously estimated that in a major shutdown, it is unable to deliver over $5.3 billion in loans to 10,000+ businesses, with an estimated $4.5 billion per day frozen.
This shutdown was no different—except that the volume was even higher due to unprecedented SBA loan activity since COVID.
With 1.4 million federal employees either furloughed or working without pay returning to normal operations, federal agencies are aggressively moving through their backlogs.
Borrowers should expect:
These are time-sensitive and trigger major rights and deadlines.
Especially for delinquent 7(a), 504, and EIDL loans.
Files previously on hold may are now being sent to Treasury for enforced collection.
This may include:
SBA loan specialists generally expedite their “catch up” efforts by tightening review standards - often resulting in arbitrary and capricious decisions.
Any pending requests are being processed in the order received.
Here is the harsh reality:
If you wait to act, you may be too late.
After shutdowns, federal agencies typically:
SBA debtors who act before their case is pulled into the backlog should have more options and better outcomes.
Regardless of the shutdown, you have important legal rights:
You must be notified before your debt is referred to Treasury's Bureau of Fiscal Service and substantial collection fees are assessed
Including legal enforceability, hardship, identity, documentation, or calculation errors.
Treasury and SBA both allow financial hardship-based accommodations.
Critical to verifying the validity of the claim.
You are not required to deal with SBA or Treasury alone. Attorneys authorized by 5 U.S.C. Section 500(b) can represent you before the SBA, Treasury, PCA, DoJ's National Central Intake Facility (NCIF) or in administrative appeals before U.S. Administrative Law Judges (ALJs) at the SBA Office of Hearings & Appeals Court (OHA).
Protect Law Group Attorneys help borrowers throughout the United States with the full spectrum of SBA & Treasury debt options:
Monthly payment relief based on documented financial hardship.
Especially useful if the debt is still with SBA (pre-Treasury).
Potentially settling for less than the full balance if you qualify.
Many cases involve SBA servicing errors that can be revealed through FOIA/PA discovery.
Bankruptcy does not automatically eliminate SBA or Treasury debt, but it can:
In some cases, we can advocate for financial hardship or recall from Treasury.
To protect client confidentiality, these examples reflect general outcomes achieved by the Firm:
You can dramatically improve your position before the backlog reaches your debt case.
Tax returns, bank statements, pay stubs, and financials.
Do not negotiate blind.
Where is the debt?
SBA? Treasury? BFS? DOJ?
One size does not fit all. Every SBA debtor's goals and risks differ.
This is your chance to get ahead—before the wave of notices hits.
This single step can preserve your rights and dramatically affect the outcome.
The shutdown may be over, but the SBA and Treasury collection surge is about to begin. Debtors who prepare now will have more options—and better outcomes—than those who wait.
If you have SBA or Treasury debt, contact Protect Law Group today for a Confidential Case Evaluation:
👉 Visit: www.SBA-Attorneys.com
👉 Call: 888-756-9969
👉 Email: Info@ProtectLawGroup.com
Do not wait for your SBA debt to get swept into the backlog. Get ahead of it. Protect yourself and your rights.
Our SBA Attorneys have guided thousands of small businesses through reviews, contested or negotiated debts assessed against owners, officers and guarantors, and litigated cases at the SBA Office of Hearings & Appeals (OHA) Court before presiding Administrative Law Judges (ALJs).
This article is provided for informational purposes only and does not constitute legal advice. Consult a qualified SBA-Attorney for advice regarding your individual situation.
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.
Clients personally guaranteed an 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.
Client's small business obtained an SBA COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement. The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.
The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.
The Firm was hired to investigate and find an alternate solution to the bankruptcy option. After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.
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