SBA Loan Default: You Pledged Your Personal Residence, Now What?
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.
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.
The client personally guaranteed an SBA 7(a) loan for $150,000. His business revenue decreased significantly causing default and an accelerated balance of $143,000. The client received the SBA's Official 60-day notice with the debt scheduled for referral to the Treasury’s Bureau of Fiscal Service for aggressive collection in less than 26 days. We were hired to represent him, respond to the SBA's Official 60-day notice, and prevent enforced collection by the Treasury and the Department of Justice. We successfully negotiated a structured workout with an extended maturity date that included a reduction of the 14% interest rate and removal of substantial collection fees (30% of the loan balance), effectively saving the client over $242,000.
Client personally guaranteed SBA 7(a) loan for $350,000. The small business failed but because of the personal guarantee liability, the client continued to pay the monthly principal & interest out-of-pocket draining his savings. The client hired a local attorney but quickly realized that he was not familiar with SBA-backed loans or their standard operating procedures. Our firm was subsequently hired after the client received the SBA's official 60-day notice. After back-and-forth negotiations, we were able to convince the SBA to reinstate the loan, retract the acceleration of the outstanding balance, modify the original terms, and approve a structured workout reducing the interest rate from 7.75% to 0% and extending the maturity date for a longer period to make the monthly payments affordable. In conclusion, not only we were able to help the client avoid litigation and bankruptcy, but our SBA lawyers also saved him approximately $227,945 over the term of the workout.
The client was personally guaranteed an SBA 7(a) loan to help with a relative’s new business venture. After the business failed, Treasury was able to secure a recurring Treasury Offset Program (TOP) levy against our client’s monthly Social Security Benefits based on the claim that he owed over $1.2 million dollars. We initially submitted a Cross-Servicing Dispute, but then, prepared and filed an Appeals Petition with the SBA Office of Hearings and Appeals (SBA OHA). As a result of our efforts, we were able to convince the SBA to not only terminate the claimed debt of $1.2 million dollars against our client (without him having to file bankruptcy) but also refund the past recurring amounts that were offset from his Social Security Benefits in connection with the TOP levy.
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