Asset Protection During SBA Default: Preventing Seizure and Liquidation
Learn strategies to protect assets during SBA loan defaults. Prevent seizures and liquidations with expert insights on defense options.
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.
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.
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.
Client personally guaranteed SBA 7(a) loan for $350,000. The small business failed but because of the personal guarantee liability, the client continued to pay the monthly principal & interest out-of-pocket draining his savings. The client hired a local attorney but quickly realized that he was not familiar with SBA-backed loans or their standard operating procedures. Our firm was subsequently hired after the client received the SBA's official 60-day notice. After back-and-forth negotiations, we were able to convince the SBA to reinstate the loan, retract the acceleration of the outstanding balance, modify the original terms, and approve a structured workout reducing the interest rate from 7.75% to 0% and extending the maturity date for a longer period to make the monthly payments affordable. In conclusion, not only we were able to help the client avoid litigation and bankruptcy, but our SBA lawyers also saved him approximately $227,945 over the term of the workout.
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