SBA Loan Default: Termination of Collection Action
Dealing with an SBA OIC case can be hard. You should allow one of our lawyers to settle SBA debt for you. Talk to us about your SBA loan default.
The transcript of the video follows below for further review.
Eligible small business owners now have more options to refinance eligible fixed assets and business expenses through the Small Business Administration (SBA) 504 Refinance Program. SBA Administrator Maria Contreras-Sweet made the program permanent. This change will help small business owners ease their financial burdens and create incentives for potential expansion and further job creation.
In making the announcement, Contreras-Sweet said: “As both a former small business owner and a banker, I know firsthand that access to capital is the single most important factor in the survival and growth of a small business. The 504 loan program with its long term fixed-rate can help refinance debt from adjustable rate loans with significant savings to borrowers. Paying off existing loans with a new loan at a lower cost can help increase cash flow, which can be especially helpful in a resurgent economy. That’s why I’m so proud to announce this Final Rule making 504 Refi permanent.”
As outlined, SBA will begin accepting applications from small business owners effective June 24, 2016. “For some time now, we’ve been making the case for the 504 Refinance Program with lawmakers, and now small businesses will have access to $7.5 billion under this program. Congress heard the combined voices of small business, lenders and SBA, and made the 504 Refinance Program permanent – a measure that I’m sure will prove essential in helping small business expand and strengthen the nation’s economy,” Contreras-Sweet said.
On December 18, 2015, Congress passed the Consolidated Appropriations Act of 2016, which made the 504 Debt Refinancing Program a permanent part of the 504 Loan Program. The 504 Refinance Program was originally a temporary measure under the Small Business Jobs Act of 2010. This temporary debt refinance program expired on September 27, 2012.
SBA is authorized to approve up to $7.5 billion for the regular 504 Loan Program and $7.5 billion in lending authority under the 504 Debt Refinancing Program, which brings the total 504 lending combined authorization to $15 billion.
The 504 Debt Refinancing Program is authorized to operate only in fiscal years during which the subsidy costs to the government are zero.
If you are facing an SBA loan default, contact us today for a FREE initial consultation with an experienced SBA workout attorney at 888-756-9969
We analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise for your SBA loan default.
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'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.
Small business and guarantors obtained an SBA COVID-EIDL loan for $1,000,000. Clients defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for collection. Treasury added nearly $500,000 in collection fees totaling $1,500,000. Clients were served with the SBA's Official 60-Day Notice and exercised the Repayment option by applying for the SBA’s Hardship Accommodation Plan. However, their application was summarily rejected by the SBA without providing any meaningful reasons. Clients hired the Firm to represent them against the SBA, Treasury and a Private Collection Agency. After securing government records through discovery, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury. During litigation and before the OHA court issued a final Decision and Order, the Firm successfully negotiated a reinstatement and recall of the loan back to the SBA, a modification of the original repayment terms, termination of Treasury's enforced collection and removal of the statutory collection fees.
Our firm successfully resolved an SBA 7a loan in the original amount of $364,000 for a New Jersey-based borrower. The client filed Chapter 7 bankruptcy but the mortgage on his real estate securing the loan remained in place. The available equity amounted to $263,470 and the deficiency equaled $317,886.
We gathered the pertinent documentation and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the mortgage for $80,000.
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