We provide borrowers with solutions to an SBA loan default and advise clients regarding solutions to SBA loan problems.
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 through all of the facets of their situations. We can create an SBA offer in compromise that can end your SBA loan problems. You should never face an SBA loan problem 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 need assistance.
The Small Business Administration's newest boss Maria Contreras-Sweet recently provided her vision for economic growth, indicating that the smallest businesses will be the mainstay of a new lending initiative.
Contreras-Sweet unveiled a new program the SBA hopes will get more smaller loans to entrepreneurs, primarily via its 7(a) program. Banks originate the loans and benefit from a federal guarantee against default of up to $5 million.
The SBA has been criticized for making too many larger loans and being less accessible to the smaller borrowers and also minorities and immigrants.
According to recent data, four out of five requests for loans from African and Hispanic Americans are for amounts of $150,000 or less, Contreras-Sweet said. With those statistics in mind, the SBA is introducing a new credit scoring system that will let banks make faster decisions on smaller financing requests, and with less paperwork involved. Moreover, the SBA hopes to increase the number of banks that lend through its guaranteed loan program.
"The time has come to reach out to all of our lending partners on small loans and bring new lenders into the SBA fold," Contreras-Sweet stated in a prepared statement.
New Model for Credit Scoring
The new credit scoring system that the SBA will use derives creditworthiness via personal and business credit.
"The SBA’s total credit score will make it easier and less time-intensive for banks to do business with the SBA," Contreras-Sweet said. "This model is cost-reducing and credit-based. It ensures that risk characteristics--not socio-economic factors--determine who is deemed creditworthy."
"By making the process quicker, cheaper, and more intutiive, these reforms will help existing lenders do more small-dollar lending," Contreras-Sweet said. The new scoring system will be available in July. SBA One will start early in 2015.
If you have a SBA loan that is in default, please contact us today for a consultation 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.
Clients executed several trust deeds pledging seven (7) real estate properties and unconditional personal guarantees for an SBA 7(a) loan from the participating lender. The clients' small business failed and eventually defaulted on repayment of the loan exposing all collateral pledged by the clients. The SBA subsequently acquired the loan balance from the lender, including the right to liquidate and collect all pledged collateral pursuant to the trust deed instruments.
The Firm was hired to negotiate separate release of lien proposals for all 7 real estate properties. In preparation for the work assignment, the Firm Attorneys initiated discovery to secure records from the SBA and Treasury's Bureau of Fiscal Service. After reviewing the records and understanding the interplay between the lender and the SBA, the attorneys then prepared, submitted and negotiated the release of lien (ROL) for each of the 7 real estate properties for consideration.
After submitting the proposals, the assigned SBA Loan Specialists approved each ROL package - significantly reducing the total SBA debt claimed.
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.
Our firm successfully assisted a client in closing an SBA Disaster Loan tied to a COVID-19 Economic Injury Disaster Loan (EIDL). The borrower obtained an EIDL loan of $153,800, but due to the prolonged economic impact of the COVID-19 pandemic, the business was unable to recover and ultimately closed.
As part of the business closure review and audit, we worked closely with the SBA to negotiate a resolution. The borrower was required to pay only $1,625 to release the remaining collateral, effectively closing the matter without further financial liability for the owner/officer.
This case highlights the importance of strategic negotiations when dealing with SBA settlements, particularly for businesses that have shut down due to unforeseen economic challenges. If you or your business are struggling with SBA loan debt, we focus on SBA Offer in Compromise (SBA OIC) solutions to help settle outstanding obligations efficiently.
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