SBA Loan Default - Can I Modify My Note?
We help people who need to avoid an SBA loan default by advising them about the SBA offer in compromise and about other various SBA loan problems.
We help people who need to avoid an SBA loan default by advising them about the SBA offer in compromise and about other various SBA loan problems.
Book a Consultation CallDealing with the idea that you might be facing SBA loan default can be terrifying. The SBA attorneys in our office are skilled at helping clients understand all of the facets of their situations. If, for instance, you need to know what an SBA offer in compromise is, you can simply ask your lawyer. You should never face SBA loan problems alone. It is important to retain the services of an attorney who can help you through this difficult time in your life. We urge you to read about the services that we have available and to contact us if you believe that we can be of assistance to you right now.
Many Borrowers ask the question - can I modify my note? In certain circumstances a note can be modified. With regard to 7(a) Loans sold on the secondary market, the Secondary Participation Guaranty Agreement (SBA Form 1086) prohibits any change to the repayment terms of the Note unless the guaranteed portion of the loan has been purchased by SBA or the written consent of the secondary market investor has been obtained—unless the modification involves a one-time deferment that does not exceed a continuous period of three monthly installments.
The date that regularly scheduled installment payments are due may be modified to facilitate the Borrower's ability to repay the loan or a workout. For example, payments originally scheduled to be made on a monthly basis, may be changed to a quarterly or annual basis if there is justification for the change such as the seasonal or cyclical nature of the Borrower's revenue stream.
A loan may be changed from a revolving loan to a non-revolving loan to facilitate the repayment or orderly liquidation of the loan.
The installment amount due under a Note may be modified to ensure that the loan balance is properly amortized over the remaining life of the loan, to help a viable Borrower meet long or short term goals, or to facilitate a workout.
The interest rate on the Note may be modified to help a viable Borrower meet long or short term goals, or to facilitate the recovery on a loan in liquidation status. For example, the interest rate may be modified as part of a workout agreement designed to achieve the highest possible recovery in the shortest amount of time.
Finally, the maturity date of a Note may be extended for up to 10 years beyond its original maturity date if:
a. The extension is requested before the SBA loan guaranty expires, i.e., less than 180 calendar days after the original maturity date; and
b. The extension will aid in the orderly repayment of the loan.
If you are in default on your SBA loan, please contact us at 888-756-9969 for your FREE case evaluation.
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.
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 COVID-19 Economic Injury Disaster Loan (EIDL) in the original amount of $150,000 for a Florida-based borrower. The loan, issued on June 4, 2020, was secured by business assets and potential personal liability through the SBA's Security Agreement.
Following the permanent closure of the business, we guided the client through the SBA’s Business Closure Review process and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the business collateral for $2,910 — satisfying the borrower’s obligations under the Security Agreement and eliminating any further enforcement risk against the pledged assets.
.jpg)
