SBA Offers in Compromise (OIC)
If you have had trouble with small business finances, then you may have heard about offer in compromise, or OIC. Here is everything you need to know.
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.
Our firm successfully resolved an SBA 7(a) loan default in the amount of $140,000 on behalf of a husband-and-wife guarantor pair. The business had closed following a prolonged decline in revenue, leaving the borrowers personally liable for the remaining balance.
After conducting a comprehensive financial analysis and preparing a detailed SBA Offer in Compromise (SBA OIC) package, we negotiated directly with the SBA and the lender to achieve a settlement for $70,000 — just 50% of the outstanding balance. This settlement released the borrowers from further personal liability and allowed them to move forward without the threat of enforced collection.
Our firm successfully facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) where borrower received an SBA disaster loan of $150,000, but due to the severe economic impact of the COVID-19 pandemic, the business was unable to recover.
Despite the borrower’s efforts to maintain operations, shutdowns and restrictions significantly reduced the customer base and revenue, making continued operations unsustainable. After a thorough business closure review, we negotiated with the SBA, securing a resolution where the borrower paid only $6,015 to release the collateral, with no further financial liability for the owner/officer.
This case demonstrates how businesses affected by the pandemic can navigate SBA loan settlements effectively. If your business is struggling with an SBA EIDL loan, we specialize in SBA Offer in Compromise (SBA OIC) solutions to help close outstanding debts while minimizing financial burden.
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.
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