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 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.
Clients' 7(a) loan was referred to Treasury's Bureau of Fiscal Service for enforced collection in 2015. They not only personally guaranteed the loan, but also pledged their primary residence as additional collateral. One of the clients filed for Chapter 7 bankruptcy thinking that it would discharge the SBA 7(a) lien encumbering their home. They later discovered that they were mistakenly advised. The Firm was subsequently hired to review their case and defend against a series of collection actions. Eventually, we were able to negotiate a structured workout for $180,000 directly with the SBA, saving them approximately $250,000 (by reducing the default interest rate and removing Treasury's substantial collection fees) and from possible foreclosure.
Client received the SBA's Official 60-Day Notice for a loan that was obtained by her small business in 2001. The SBA loan went into default in 2004 but after hearing nothing from the SBA lender or the SBA for 20 years, out of the blue, she received the SBA's collection due process notice which provided her with only one of four options: (1) repay the entire accelerated balance immediately; (2) negotiate a repayment arrangement; (3) challenge the legal enforceability of the debt with evidence; or (4) request an OHA hearing before a U.S. Administrative Law Judge.
Client hired the Firm to represent her with only 13 days left before the expiration deadline to respond to the SBA's Official 60-Day Notice. The Firm attorneys immediately researched the SBA's Official loan database to obtain information regarding the 7(a) loan. Thereafter, the Firm attorneys conducted legal research and asserted certain affirmative defenses challenging the legal enforceability of the debt. A written response was timely filed to the 60-Day Notice with the SBA subsequently agreeing with the client's affirmative defenses and legal arguments. As a result, the SBA rendered a decision immediately terminating collection of the debt against the client's alleged personal guarantee liability saving her $50,000.
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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