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Servicing and Liquidation Actions Matrix

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Servicing and Liquidation Actions Matrix

The Servicing and Liquidation Actions Matrix was published on SBA’s website recently. SBA has designed this matrix to be a quick reference guide for Certified Development Companies (CDCs) to determine whether specific servicing and liquidation actions can be taken under their unilateral authority - especially with regards to SBA 504 loans.

  • This new and improved version of the matrix was updated to reflect guidance in SOP 50 55, 504 Loan Servicing and Liquidation, that went into effect October 1, 2013.
  • The format of the matrix has been revised to be more user friendly and is consistent with the order of SOP 50 55.
  • This version contains more actions than the previous version.
  • Unilateral authority is based on CDC type and not Loan Type. This aligns with the Regulations governing the 504 Program that provide unilateral authority to PCLP CDCs, regardless of the loan’s delivery method.
  • ALP CDCs now have essentially the same unilateral authority as Non-PCLP CDCs. The matrix will be revised to reflect these changes.
  • SBA has developed the matrix to be utilized as a tool and is not meant to be a substitute for Program requirements. Therefore, CDCs must follow SBA Loan Program Requirements in the SOPs when taking any action, including unilateral actions.
  • CDCs must provide notification to SBA when taking any unilateral actions.
  • CDCs must document the business reason and justification for decisions and retain these and supporting documents in the loan file.
  • When taking action within a CDCs unilateral authority, SBA strongly encourages the CDC to document the loan file as such, "This action was taken under unilateral authority.”

Click on this link SBA Matrix to review the updated information concerning CDC Servicing and Liquidation Actions relating to SBA loan default.

You should not have to struggle to settle SBA debt on your own. Instead, turn to one of our NADCO affiliate attorneys who specializes in SBA OIC and DOT collection claims. We are dedicated to helping you settle SBA loan default.

If you are struggling with circumstances that involve SBA loan default, you deserve professional help! Our attorneys all know how to resolve SBA OIC and DOT collection cases. If you contact us, we can help you settle SBA debt once and for all. After you schedule an appointment, you will meet with a dedicated SBA OIC & DOT Attorney who helps you through your administrative legal battle. After your claim is resolved, you never again have to worry about your SBA loan default problem haunting you. Our team of lawyers has assisted many clients through the years. Now it is your turn! You truly can resolve SBA debt for good!

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

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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

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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

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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.

$430,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

$430,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

Clients' 7(a) loan was referred to Treasury's Bureau of Fiscal Service for enforced collection in 2015. They not only personally guaranteed the loan, but also pledged their primary residence as additional collateral.  One of the clients filed for Chapter 7 bankruptcy thinking that it would discharge the SBA 7(a) lien encumbering their home. They later discovered that they were mistakenly advised. The Firm was subsequently hired to review their case and defend against a series of collection actions. Eventually, we were able to negotiate a structured workout for $180,000 directly with the SBA, saving them approximately $250,000 (by reducing the default interest rate and removing Treasury's substantial collection fees) and from possible foreclosure.

$324,000 SBA 7A LOAN - SBA OHA LITIGATION

$324,000 SBA 7A LOAN - SBA OHA LITIGATION

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.

$750,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

$750,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

Client’s small business obtained an SBA 7(a) loan for $750,000.  She and her husband signed personal guarantees exposing all of their non-exempt income and assets. With just 18 months left on the maturity date and payment on the remaining balance, the Great Recession of 2008 hit, which ultimately caused the business to fail and default on the loan terms. The 7(a) lender accelerated and sent a demand for full payment of the remaining loan balance.  The SBA lender’s note allowed for a default interest rate of about 7% per year. In response to the lender's aggressive collection action, Client's husband filed for Chapter 7 bankruptcy in an attempt to protect against their personal assets. However, his bankruptcy discharge did not relieve the Client's personal guarantee liability for the SBA debt. The SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection against the Client to the SBA. The Client then received the SBA Official 60-Day Notice. After conducting a Case Evaluation with her, she then hired the Firm to respond and negotiate on her behalf with just 34 days left before the impending referral to Treasury. The Client wanted to dispute the SBA’s alleged debt balance as stated in the 60-Day Notice by claiming the 7(a) lender failed to liquidate business collateral in a commercially reasonable manner - which if done properly - proceeds would have paid back the entire debt balance.  However, due to time constraints, waivers contained in the SBA loan instruments, including the fact the Client was not able to inspect the SBA's records for investigation purposes before the remaining deadline, Client agreed to submit a Structured Workout for the alleged balance in response to the Official 60-Day Notice as she was not eligible for an Offer in Compromise (OIC) because of equity in non-exempt income and assets. After back and forth negotiations, the SBA Loan Specialist approved the Workout proposal, reducing the Client's purported liability by nearly $142,142.27 in accrued interest, and statutory collection fees. Without the Firm's intervention and subsequent approval of the Workout proposal, the Client's debt amount (with accrued interest, Treasury's statutory collection fee and Treasury's interest based on the Current Value of Funds Rate (CVFR) would have been nearly $291,030.

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