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.
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 consultation.
Patrick Clark of www.BloombergBusiness.com recently wrote an article critical of SBA lending to franchises based on a report by the Service Employees International Union, the labor group that’s been fighting to raise pay for fast-food workers. Clark notes that default rates for franchises hovers around 20%.
Clark writes "John Reynolds, president of the International Franchise Association Educational Foundation, says the union was “cherry-picking” data, and that the focus should be on the tens of thousands of franchisees who used SBA loans to successfully expand their businesses and add jobs to the U.S. economy. “I think [the SEIU] have an agenda that’s focused around casting doubt or criticism on the fundamentals of the franchise model..."
Based on Protect Law Group's research and analysis, a 20% failure rate seems accurate. It has been well documented that certain franchises, such as Quiznos, have extremely high default rates. In our discussions with SBA lenders, a franchise is often a very rough road. For a small operator 80 hour weeks for $50,000 per year is a common life for a franchise owner of even a trusted brand such as Subway. The franchise fees, costs of buying supplies from franchisors, and lack of freedom often hamstring small franchisees. Larger franchisees who can operate multiple stores are often more successful.
Protect Law Group has helped dozens of failed franchisees settle their SBA related debt. We provide an in depth study of a particular franchise's default rates, the reason why and apply those facts and analysis to help our clients obtain a satisfactory compromise with the SBA.
You can read the complete article here.
If you are facing an SBA loan default, contact us today for a consultation with an experienced SBA workout attorney at 888-756-9969.
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 borrowed and personally guaranteed an SBA 7(a) loan. Clients defaulted on the SBA loan and were sued in federal district court for breach of contract. The SBA lender demanded the Client pledge several personal real estate properties as collateral to reinstate and secure the defaulted SBA loan. We were subsequently hired to intervene and aggressively defend the lawsuit. After several months of litigation, our attorneys negotiated a reinstatement of the SBA loan and a structured workout that did not involve any liens against the Client's personal real estate holdings.
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.
Clients obtained an SBA 7(a) loan for $324,000 to buy a small business and its facility. The business and real estate had an appraisal value of $318,000 at the time of purchase. The business ultimately failed but the participating lender abandoned the business equipment and real estate collateral even though it had valid security liens. As a result, the lender recouped nearly nothing from the pledged collateral, leaving the business owners liable for the deficiency balance. The SBA paid the lender the 7(a) guaranty money and was assigned ownership of the debt, including the right to collect. However, the clients never received the SBA Official 60-Day Notice and were denied the opportunity to negotiate an Offer in Compromise (OIC) or a Workout directly with the SBA before being transferred to Treasury's Bureau of Fiscal Service, which added an additional $80,000 in collection fees. Treasury garnished and offset the clients' wages, federal salary and social security benefits. When the clients tried to negotiate with Treasury by themselves, they were offered an unaffordable repayment plan which would have caused severe financial hardship. Clients subsequently hired the Firm to litigate an Appeals Petition before the SBA Office & Hearings Appeals (OHA) challenging the legal enforceability and amount of the debt. The Firm successfully negotiated a term OIC that was approved by the SBA Office of General Counsel, saving the clients approximately $205,000.
.jpg)
