SBA LOAN PROBLEMS: DO SMALL BUSINESS LOANS HELP?
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.
We help people who need to avoid SBA loan default by educating them on SBA OIG investigations, teaching about SBA offer in compromise and about various SBA loan problems.
Book a Consultation CallDealing with the idea that you might be facing SBA loan default can be terrifying. The SBA attorneys in our office are skilled at helping clients understand all of the facets of their situations. If, for instance, you need to know what an SBA offer in compromise is, you can simply ask your lawyer. You should never face 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. We urge you to read about the services that we have available and to contact us if you believe that we can be of assistance to you right now.
On May 26, 2015, the SBA's Office of Inspector General (hereafter "SBA OIG") issued Evaluation Report 15-12, Improvement is Needed in SBA’s Separation Controls and Procedures. Their objective was to determine the effectiveness of the Small Business Administration’s (SBA) controls over separated personnel.
The SBA OIG found that existing separation controls were not effectively followed. These controls include deactivating network accounts within 24 hours of separation and collecting Federal property from separated personnel. Specifically, the SBA OIG's analysis of network accounts identified 73 active accounts which should have been deactivated when the personnel separated from SBA. A large number of these 73 accounts were not automatically deleted as those accounts had never been accessed. Additionally, two active network accounts were accessed after the personnel had separated from the Agency—which was identified as security incidents.
The SBA OIG also reviewed 57 employee separation checklists, which are used to document the termination of network access and collect Federal property from separated employees. However, the SBA OIG found that less than half of the forms—46 percent—were correctly completed, and 19 percent could not be found.
The SBA OIG also found multiple errors in the manner that contracting officer’s representatives (CORs) carried out contractor separations, and also noted that SBA did not have formal procedures on how to deactivate and terminate intern and volunteer accounts.
The SBA OIG made six recommendations to SBA. SBA fully agreed with five of the six recommendations, and partially agreed with the sixth recommendation. SBA agreed to reinforce the importance of completing the separation checklist. Additionally, SBA identified that it would start holding line-management responsible if the forms were not fully completed. SBA agreed to investigate the two security incidents and report these incidents to the US Computer Emergency Readiness Team. SBA agreed to a new recertification policy in which every account is reviewed and any account not accessed within the previous 60 days is disabled. SBA agreed to revise contracting guidance so that CORs follow the same separation guidance as other SBA personnel with separations documented in a separation checklist. Finally, SBA agreed to have interns and volunteer separation procedures documented in revised Personnel ID Verification card procedures.
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 personally guaranteed SBA 504 loan balance of $750,000. Clients also pledged the business’s equipment/inventory and their home as additional collateral. Clients had agreed to a voluntary sale of their home to pay down the balance. We intervened and rejected the proposed home sale. Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.
Client’s small business obtained an SBA 7(a) loan for $150,000. He and his wife signed personal guarantees and pledged their home as collateral. The SBA loan went into default, the term or maturity date was accelerated and demand for payment of the entire amount claimed was made. The SBA lender’s note gave it the right to adjust the default interest rate from 7.25% to 18% per annum. The business filed for Chapter 11 bankruptcy but was dismissed after 3 years due to its inability to continue with payments under the plan. Clients wanted to file for Chapter 7 bankruptcy, which would have been a mistake as their home had significant equity to repay the SBA loan balance in full as the Trustee would likely seize and sell the home to repay the secured and unsecured creditors. However, the SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection to the SBA. Clients then received the SBA Official 60-Day Notice and hired the Firm to respond to it and negotiate on their behalf. Clients disputed the SBA’s alleged balance of $148,000, as several payments made to the SBA lender during the Chapter 11 reorganization were not accounted for. To challenge the SBA’s claimed debt balance, the Firm Attorneys initiated expedited discovery to obtain government records. SBA records disclosed the true amount owed was about $97,000. Moreover, because the Clients’ home had significant equity, they were not eligible for an Offer in Compromise or an immediate Release of Lien for Consideration, despite being incorrectly advised by non-attorney consulting companies that they were. Instead, our Firm Attorneys recommended a Workout of $97,000 spread over a lengthy term and a waiver of the applicable interest rate making the monthly payment affordable. After back and forth negotiations, SBA approved the Workout proposal, thereby saving the home from imminent foreclosure and reducing the Clients' liability by nearly $81,000 in incorrect principal balance, accrued interest, and statutory collection fees.
Our firm successfully negotiated an SBA offer in compromise (SBA OIC), settling a $974,535.93 SBA loan balance for just $18,000. The offerors, personal guarantors on an SBA 7(a) loan, originally obtained financing to purchase a commercial building in Lancaster, California.
The borrower filed for bankruptcy, and the third-party lender (TPL) foreclosed on the property. Despite the loan default, the SBA pursued the offerors for repayment. Given their limited income, lack of significant assets, and approaching retirement, we presented a strong case demonstrating their financial hardship.
Through strategic negotiations, we secured a favorable SBA settlement, reducing the nearly $1 million debt to a fraction of the amount owed. This outcome allowed the offerors to resolve their liability without prolonged financial strain.
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