The federal Small Business Administration does a lot of important work for the nation's economy, advocating for and educating the founders and operators of hundreds of thousands of small companies. One of the SBA's most popular service offers is its loan program, an option that can see borrowers gaining access to credit at favorable terms where they might otherwise have been denied. While the program itself is therefore fairly generous, an SBA loan default is typically a serious matter, as the agency has a variety of ways of recouping money that might normally be drained from its coffers.
Borrowers who have failed to keep up with payments typically receive ample notice before things become more serious, however. By the time an SBA demand letter arrives in a borrower's hands, it is best to have already begun making arrangements to satisfy the obligation. Avoiding an SBA loan foreclosure or other harsh measure should almost always be a high priority, and it can be much easier to do so when skilled assistance is available.
The fact is that many borrowers have options beyond finding the money needed to fully satisfy a loan. While it can be difficult for laypersons to extract concessions from SBA negotiators and agents, those who are informed about the law and the relevant norms often have much greater success.
What this often means in practice is that it can be a good idea to get in touch with an attorney once it becomes apparent that trouble is in the making. One commonly appealing option is for a business owner to settle a loan with lessened requirements compared to the original terms, a victory that can allow a company to continue instead of effectively being forced into bankruptcy.
Obtaining such an SBA Offer in Compromise can be challenging, but the results are frequently worth the effort that is put in. An acceptable offer can see a company and its owner freed from the threat of foreclosure or the confiscation of refunds under the Tax Offset Program, making it much easier to recover from financial difficulties. For these reasons and others, actively seeking out the best possible resolution is typically far superior to allowing things to run their course.
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 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 resolved an SBA 7(a) loan default in the amount of $140,000 on behalf of a husband-and-wife guarantor pair. The business had closed following a prolonged decline in revenue, leaving the borrowers personally liable for the remaining balance.
After conducting a comprehensive financial analysis and preparing a detailed SBA Offer in Compromise (SBA OIC) package, we negotiated directly with the SBA and the lender to achieve a settlement for $70,000 — just 50% of the outstanding balance. This settlement released the borrowers from further personal liability and allowed them to move forward without the threat of enforced collection.
The client personally guaranteed an SBA 504 loan balance of $375,000. Debt had been cross-referred to the Treasury at the time we got involved with the case. We successfully had debt recalled to the SBA where we then presented an SBA OIC that was accepted for $58,000.
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