SBA Debt Relief Options
Looking for SBA debt relief options? Click here to find out how submitting SBA offers in compromise can reduce your non-tax debt!
We help people who need to avoid SBA loan default by advising about solutions to various SBA loan problems including SBA loan foreclosure.
Book a Consultation CallThe attorneys in our office want to help you figure out your SBA situation. 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 specialists can tell you about all of these topics and more. We urge you to read our blog to learn more about subjects that are confusing to you and to contact us right away if you have specific questions. We look forward to working with you during this period of your life.
While a loan is classified in regular servicing status, it is housed in one of the SBA's two Commercial Loan Service Centers (CLSC) – either Fresno or Little Rock. The process begins when the SBA is notified by the appropriate CLSC that workout is not feasible and liquidation is necessary, the loan is then shipped to the National Guaranty Purchase Center (NGPC) logged in, and classified as in liquidation and then housed awaiting reports and status updates as to action taken commensurate to the loan. The loans are not assigned to any staff member and this Center handles most necessary actions by specialized teams. The NGPC will acknowledge the notification and the Lender will be expected to continue to service this account and completely liquidate or sue upon any loan instrument. The Lender is required to pursue the entire indebtedness regardless of the guaranteed percentage or any purchase thereof. Also note that SBA requires all lenders to make timely site visits to assess the value and take an inventory of loan collateral in order to assess workout possibilities and to develop a meaningful liquidation plan.
2. SBA Loan Management: Primary oversight will be centered around the guaranty purchase review process, timely quarterly updates, and through the thorough review of liquidation wrap-up reports which Lenders must submit to SBA at the completion of liquidation. Secondarily, SBA will monitor debt collection litigation, such as judicial foreclosures, bankruptcy proceedings and other state and federal insolvency proceedings, through the review of litigation plans when applicable and required by circumstances.
Key actions:
1. Guaranty purchase. This includes a detailed review of all origination, servicing, and liquidation actions to ensure that the loan was handled properly; this is done using the Guaranty Purchase 10 Tabs.
2. CPC Expenses. After the loan has been purchased, if there are liquidation expenses that are incurred the lender would be able to submit for reimbursement using CPC tabs.
3. Offer in Compromise. Typically at the culmination of the liquidation of all business and other worthwhile assets, and OIC is the process used to evaluate a monetary offer in exchange for the release of a personal guaranty on the loan. An Offer in Compromise is an action that requires SBA’s expressed written consent and may be submitted to SBA using the OIC Tabs.
4. Quarterly Updates. Once a loan has been purchased, SBA requires a simple update on a quarterly basis for every loan in liquidation status. This report should include the current actions being taken on the loan.
5. Charge off. Once all liquidation is complete and no further recoveries are expected the loan can then be charged off. This is done by the lender submitting a final wrap up report to SBA.
6. Referral to the US Treasury Offset Program Once the loan has been charged off by SBA, if there are any parties that are eligible (provided they have not been discharged from bankruptcy and/or they were not released as part of an Offer in Compromise) they will be referred to the U.S. Treasury Offset Program for further collection. Once this takes place the servicing of the loan shifts from the lender to Treasury or their fee agents. If any recoveries are received they will be shared with the lender, based on the guaranty rate, and the lender’s share will be forwarded to them (less any expenses incurred by Treasury).
If you'd like to learn more about the options you have for your SBA loan, call for a case evaluation at 1-888-756-9969.
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.
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 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 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’sBureau 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.
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