We provide people who are facing an SBA loan default with solutions. We analyze SBA loan problems and provide solutions such as an SBA offer in compromise.
Book a Consultation CallDealing with the idea that you might be facing an SBA loan default can be terrifying. The SBA attorneys in our office are skilled at helping clients understand all the facets of their situation. We will advise you as to the potential for an SBA offer in compromise. You should never face your 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. Please contact us for a free initial consultation.
Pursuant to SBA Standard Operating Procedures (SOPs) a lender is limited as to what fees it can charge a borrower.
What Fees Can a Lender Charge?
Extraordinary servicing.
Subject to prior written SBA approval, if all or part of a loan will have extraordinary servicing needs, the Lender may charge the applicant a service fee not to exceed 2 percent per year on the outstanding balance of the part requiring special servicing. An example of extraordinary servicing is the special servicing required on an Asset Based Line of Credit, under the umbrella of the CAPLines program where the lender must conduct field audits of inventory and accounts receivable, collect receivables, and maintain cash collateral accounts.
Out-of-pocket expenses.
The Lender may collect from the applicant necessary out-of-pocket expenses such as filing or recording fees. Expenses incurred by the lender may be added to the loan balance while SBA's guaranty is outstanding with SBA's approval (except for PLP, LowDoc, and FA$TRAK). For loans sold in the secondary market, they may NOT be added to the loan balance prior to SBA purchasing the guaranty.
Late payment fee.
The Lender may charge the Borrower a late payment fee not to exceed 5 percent of the regular loan payment.
(b) Is the fee mandatory?
i. No, the late fee is optional; and
ii. Lenders may charge less than 5 percent. (c)
When can the lender charge the late fee?
The late fee may be collected if the lender receives a payment more than 10 days after its due date. For example, if the payment is due on the 5th, the lender can collect the late fee if the payment is received on or after the 16th. The lender must not add late fees to the transcript of account submitted by the lender for purchase of the guaranty. The SBA will not be responsible for paying any late fees. If SBA purchases a loan, SBA will permit the lender to collect late fees from the borrower which were owed at the time of purchase, but only AFTER SBA has been paid in full. The lender must apply all scheduled loan payments first to interest and then to principal.
What fees are prohibited?
The Lender may not charge a fee for full or partial prepayment of a loan.
If you have an SBA loan in default, contact us today at 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 for $150,000. COVID-19 caused the business to fail, and the loan went into default with a balance of $133,000. Client initially hired a non-attorney consultant to negotiate an OIC. The SBA summarily rejected the ineligible OIC and the debt was referred to Treasury’s ureau of Fiscal Service for enforced collection in the debt amount of $195,000. We were hired to intervene and initiated discovery for SBA and Fiscal Service records. We were able to recall the case from Fiscal Service back to the SBA. We then negotiated a structured workout with favorable terms that saves the client approximately $198,000 over the agreed-upon workout term by waiving contractual and statutory administrative fees, collection costs, penalties, and interest.
The clients are personally guaranteed an SBA 7(a) loan. The SBA referred the debt to the Department of Treasury, which was seeking payment of $487,981 from our clients. We initially filed a Cross-Servicing Dispute, which was denied. As a result, we filed an Appeals Petition with the SBA Office of Hearings and Appeals asserting legal defenses and supporting evidence uncovered during the discovery and investigation phase of our services. Ultimately, the SBA settled the debt for $25,000 - saving our clients approximately $462,981.
Our firm successfully resolved an SBA 7(a) loan default in the amount of $140,000 on behalf of a husband-and-wife guarantor pair. The business had closed following a prolonged decline in revenue, leaving the borrowers personally liable for the remaining balance.
After conducting a comprehensive financial analysis and preparing a detailed SBA Offer in Compromise (SBA OIC) package, we negotiated directly with the SBA and the lender to achieve a settlement for $70,000 — just 50% of the outstanding balance. This settlement released the borrowers from further personal liability and allowed them to move forward without the threat of enforced collection.
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