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SBA Loan Default and Private Collection Agencies

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SBA Loan Default and Private Collection Agencies


The transcript of the video follows below for further review.

The Debt Collection Improvement Act of 1996 requires the the Department of the Treasury (DOT) to maintain a schedule of private collection agencies (PCAs), which are private sector companies with expertise in the area of debt collection, to assist the government in its debt collection efforts. As part of the Cross-Servicing program (wherein debts owed to government agencies such as the SBA are referred to the DOT for collection) the DOT attempts to collect delinquent debt through several means, including demand letters, telephone calls, the Treasury Offset Program (TOP), administrative wage garnishment, and credit bureau reporting. Once the DOT has at the very least sent a demand letter and possibly tried other collection efforts, the DOT refers debt collection to one of four PCAs. The activities of the PCAs are monitored by the personnel of the Receivables Management and Debt Services Division of Debt Management Services (DMS).

What is a private collection agency? A private collection agency (PCA) is a private sector company specializing in the collection of delinquent debt. A PCA will attempt to find and contact a debtor by searching various databases, making telephone calls, and sending collection letters. Once the debtor is located and contacted, the PCA will encourage the debtor to satisfy the debt. A PCA may help the DOT resolve the debts through negotiating payment in full, a payment agreement, utilizing administrative wage garnishment, or finding that the debt may be resolved administratively.  Incredibly, often times dealing with a PCA is more productive than dealing directly with the DOT.

Fiscal Service awards PCA Task Orders. Fiscal Service awards Task Orders to PCAs for debt collection services under a General Services Administration Schedule. Fiscal Services’s current Task Orders to enlist the services of PCA contractors became effective on March 12, 2012. These Task Orders were awarded in order to increase the recovery of and resolve delinquent non-tax federal debts. The Task Orders were awarded for one base year, with four one-year options available. Fiscal Service awarded the following contractors a debt collection Task Order to provide delinquent debt collection services:

The CBE Group, Inc.

ConServe, Inc.

Performant Recovery, Inc.

Pioneer Credit Recovery, Inc.

PCA regulation. The collection efforts of the PCAs are governed by various federal and state laws, including, but not limited to, the Fair Debt Collection Practices Act (FDCPA), the Federal Claims Collection Standards (FCCS), and the Privacy Act.  If the first PCA is unable to successfully resolve or collect a debt, the debt is then referred to a second PCA.  The PCAs are compensated on a performance basis.

If you have defaulted on an SBA loan please contact Protect Law Group at 1-888-756-9969 for a consultation with one of our SBA workout attorneys or contact us online. 

We analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise for your SBA loan default.

Why Hire Us to Help You with Your Treasury or SBA Debt Problems?

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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

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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

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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.



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.



Clients personally guaranteed SBA 504 loan balance of $750,000.  Clients also pledged the business’s equipment/inventory and their home as additional collateral.  Clients had agreed to a voluntary sale of their home to pay down the balance.  We intervened and rejected the proposed home sale.  Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.



Client personally guaranteed SBA 7(a) loan balance of over $150,000.  Business failed and eventually shut down.  SBA then pursued client for the balance.  We intervened and was able to present an SBA OIC that was accepted for $30,000.

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