SBA Loan Problems: SBA’s New SOP 5057 2 for 7(A) Loan Servicing and Liquidation
We will analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise for your SBA loan default.
We help people who need to avoid SBA loan default by teaching them about SBA offer in compromise and about various SBA loan problems.
Book a Free Consultation CallThe attorneys in our office want to help you figure out your SBA problem. No matter how difficult your circumstances may seem, the right lawyer can assist you. We understand that you probably have questions regarding a wide range of issues, including how to respond to an SBA demand letter, what SBA loan foreclosure actually entails, and what a tax offset program is. One of our attorney specialists can tell you about all of these topics and more.
A Republican senator is wondering whether the Small Business Administration’s 7(a) loan program puts taxpayer money at risk without proper administration.
Senator Jeff Sessions of Alabama wrote to new SBA chief Maria Contreras-Sweet to express his belief that the SBA “has not met the high standards required in providing loan guarantees.” Specifically, the senator worries that the agency’s 7(a) lending program, which backstops private lender banks by guaranteeing up to 85 percent of the value of small business loans they make, permits banks to lend with minimal regard to whether the borrower will be able to pay.
Sessions took issue with the SBA’s 7(a) loan program, which backed $17.9 billion in non-real estate loans in the 12 months ended September 2013. To further his stance, Sessions cited to reports from the press and the SBA Inspector General that show high default rates on 7(a) loans made to various franchise owners such as Quiznos, Cold Stone Creamery, and Huntington Learning Center. Because the government guarantees a large percentage of those loans, “the lender still makes a profit while taxpayers shoulder the cost of the default,” wrote Sessions. “This is what economists call moral hazard.”
Sessions’s letter asks Contreras-Sweet to answer to 17 points, and a specific focus on franchise loans: “Please explain whether or not the SBA has excluded certain franchises because of high default rates, and provide the percentage of defaults necessary to exclude a franchise. If the SBA does not exclude franchises based on default rate or otherwise, please state whether the SBA believes it has the authority to do so.”
The missive also suggests that the SBA should transfer more risk to banks, and asks the SBA to provide data on banks that have been excluded from SBA programs for funding a large number of bad loans. Sessions also takes issue with banks’ practice of selling portions of 7(a) loans to outside investors: “Does the SBA believe that lenders would take more care in issuing loans if guaranteed loans were not transferable?”
The GAO found last September that the SBA has a pattern of starting new programs without gathering “information needed to assess their performance,” auditors wrote. The watchdog was writing specifically about pilot programs. Sessions argues that larger, established programs also merit a closer look.
If you have a defaulted SBA loan, contact us immediately at 1-888-756-9969 for a 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. Client received Notice of Intent to initiate Administrative Wage Garnishment (AWG) Proceedings. We represented client at the Hearing and successfully defeated the AWG Order based on several legal and equitable grounds.
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 an SBA 7(a) loan to help with a relative’s new business venture. After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against our client’s monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars. We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA). As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy), but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.
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