If you Owe more than $30,000 contact us for a case evaluation at (833) 428-0937
contact us for a free case evaluation at (833) 428-0937
Call us (833) 428-0937

SBA SOP 50 51 3- Classifying Loans in Liquidation

Blog article by expert SBA workout attorneys from Protect Law Group, APC regarding SBA loans classified in liquidation status and how lenders begin the process

Book a Consultation Call

SBA SOP 50 51 3- Classifying Loans in Liquidation

SBA SOP 50 51 3 is a very important standard operating procedure which needs to be understood by SBA debtors looking to resolve their SBA guaranteed debt.  We will be reviewing and commenting on this SBA SOP through a series of blog articles to give debtors knowledge as knowledge is power.

A.      When Loans Must Be Classified in Liquidation Status

An SBA Loan must be classified in liquidation status if any of the adverse events listed below occur:

  1. The loan is more than 60 days past due with no prospect of a deferment or a workout;
  2. A Third Party Lender or another senior lienholder has initiated a foreclosure action against collateral securing the loan;
  3. A lawsuit, which will adversely affect repayment of the SBA Loan, has been initiated against an Obligor;
  4. An Obligor has filed a voluntary petition in bankruptcy, or an involuntary petition in bankruptcy has been filed against an Obligor;
  5. The Borrower's business has been shut down or abandoned and the Obligors have not made other arrangements to repay the SBA Loan;
  6. Substantial collateral has been abandoned or is in danger of disappearing, losing its value, or being stolen;
  7. A receiver has been appointed by a court, or some other action has been initiated to liquidate the collateral or an Obligor's assets; or
  8. Any other circumstances that could substantially and adversely affect repayment of the SBA Loan.

B. When Loans Should Be Removed from Liquidation Status

SBA Loans should be removed from liquidation status and returned to regular servicing after three consecutive timely payments have been made pursuant to a written workout agreement, bankruptcy plan, reaffirmation agreement, assumption or other written agreement that cures the default.

Think of us - Protect Law Group, APC - as your "go to" team for whatever needs you may have in the SBA loan problem resolution world.

We can provide professional help at specific SBA touch points upon default from loan restructuring to loan problem defense & negotiation liquidation and appeals to the SBA Office of Hearing & Appeals. To learn more about our SBA representation services, go to www.SBA-Attorneys.com or call us at 888-756-9969 to speak to one of our experienced SBA Workout Attorneys.

Why Hire Us to Help You with Your Treasury or SBA Debt Problems?

construction accident injury lawyer

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

slip and fall attorney

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

truck accident injury attorney

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 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 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.



Client personally guaranteed SBA 7(a) loan balance of $58,000.  Client received Notice of Intent to initiate Administrative Wage Garnishment (AWG) Proceedings.  We represented client at the Hearing and successfully defeated the AWG Order based on several legal and equitable grounds.

Read more Case Results

Related Content

Read more sba debt articles