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 obtained an SBA 7(a) loan for their small business in the amount of $298,000. They pledged their primary residence and personal guarantees as direct collateral for the loan. The business failed, the lender was paid the 7(a) guaranty money and the debt was assigned to the SBA. Clients received the Official 60-Day Notice giving them a couple of options to resolve the debt balance directly with the SBA before referral to Treasury's Bureau of Fiscal Service. The risk of referral to Treasury would add nearly $95,000 to the SBA principal loan balance. With the default interest rate at 7.5%, the amount of money to pay toward interest was projected at $198,600. Clients hired the Firm with only 4 days left to respond to the 60-Day due process notice. Because the clients were not eligible for an Offer in Compromise (OIC) due to the significant equity in their home and the SBA lien encumbering it, the Firm Attorneys proposed a Structured Workout to resolve the SBA debt. After back and forth negotiations, the SBA Loan Specialist assigned to the case approved the Workout terms which prevented potential foreclosure of their home, but also saved the clients approximately $294,000 over the agreed-upon Workout term with a waiver of all contractual and statutory administrative fees, collection costs, penalties, and interest.
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.
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.
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