The SBA Doesn't Track State by State SBA Loan Defaults
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.
SBA Help for Coronavirus Outbreak: SBA Programs Available for Small Businesses as Domino Effect Begins to Unfold within the Next 4-8 Weeks
Unfortunately, the Coronavirus (aka COVID-19) has breached our borders so prevention is no longer a viable remedy. Travel blockades and restrictions will not be effective. Now that the virus is in the U.S., the primary objective is to contain “community spread.”
There are options available to try to stem the tide and deter “community spread.” The 4 major options are discussed in an interesting Washington Post article, which can be accessed here: https://www.washingtonpost.com/graphics/2020/world/corona-simulator/?utm_source=pocket-newtab
Whatever measures are implemented, it should be noted that this public health crisis will impact our economy – definitely in the short term (hopefully, not in the long term) – as containment of “community spread’ is the only viable response at this point – especially since we will not be able to conjure up an anti-viral drug or vaccine within the next 2 months to either cure or prevent the disease. The objective is to prevent a systemic failure to our health care system, which occurred in Italy where arguably unethical decisions were made for triage purposes to care for those individuals with a better survival rate than those who’s odds are worse. This translates into discriminatory health care – a selection process that does not bode well for the elderly (age discrimination) and for minorities (race-based due to preconceived notions of underlying health conditions).
So, what is the federal government’s plan for small businesses currently or about to be affected by measures implemented to date to stem “community spread’ from the Coronavirus Outbreak?
As of March 12, 2020, President Trump proposed the following ideas:
For current small business affected by federal, state and local restrictions with SBA 504, 7(a) or Micro Loans, deferment or forbearance options may be one of your options. Information relating to deferment options are available in the following links:
SBA Information Notice 5000-20004
President Trump announced Friday, March 13, 2020, the Small Business Administration is "stacked" with money to help small businesses during the Coronavirus outbreak. See https://youtu.be/he83H_yI7RA. A national emergency has been declared, freeing up additional federal funding.
President Trump announced earlier this week his intent to help the U.S. economy during the Coronavirus outbreak by increasing SBA funding by an unprecedented $50 billion.
More information will be released as the rules are published.
On March 13, 2020, the Coronavirus Preparedness and Response Supplemental Appropriations Act (H.R. 6074) was signed by the President and became law. The legislation provides $8.3 billion in new funding to support public health services and businesses negatively impacted by the COVID-19 outbreak. In addition to providing public health agencies with $950 million, the new appropriations are estimated to allow the SBA to provide $7 billion in loans to small businesses.
"For many American small businesses, the outbreak of coronavirus means fewer customers, gaps in supply chains, and workforce reductions," says House Small Business Committee Chairwoman, Nydia M. Velázquez. "That is why [...] the House acted to open critical economic injury loans to small businesses dealing with the consequences of the coronavirus outbreak. These low-interest loans will inject much-needed capital into Main Street businesses as they recover from the hardship of operating during a public health crisis."
"I'm grateful that this bill includes a provision [...] to deal with some of the economic impacts of this." U.S. Representative Derek Kilmer said in a press release last week. "I've already heard some export-dependent manufacturers have been negatively impacted by this situation. It's important for the federal government to have the backs of our small businesses by providing this assistance."
Review the following sources here:
H.R. 6074
The House Committee on Small Business - Press Release
SBA Disaster Loan Program
The SBA website has not yet been updated with specific information about the loans and lending plans available for coronavirus-related small business recoveries. However, it is likely that the SBA will offer the low-interest loans as part of its established Small Business Disaster Loan program.
If you are facing inevitable issues and problems with your SBA loan either with your SBA 7(A) lender, your Certified Development Corporation (CDC) regarding your SBA 504 loan or Disaster Loan (i.e., EIDL, Home or Business Disaster Loan), contact us today for a case evaluation with an experienced SBA attorney at 1-888-756-9969
We can analyze your SBA challenges, issues and problems stemming from the Coronavirus health scare and advise you on a range of potential solutions in light of the current legislation, federal rules and regulations.
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’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.
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.
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.
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