SBA Loan Default and the SBA Disaster Relief Loan
We will analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise.
For many years, the Small Business Administration (SBA) has been helping individuals and small businesses acquire loans for entrepreneurial enterprises. Many small businesses are in business today thanks to the SBA. Because the SBA is a government organization, they have a broad reach and many banks, both national as well a regional, are authorized to offer these loans. However, if a business were to fail before an SBA loan is repaid, collection efforts can be significant. Many times, a law practice that understands things such as an SBA Offer in Compromise can be helpful.
When a business fails prior to fully repaying an SBA loan, the former business owner may start to panic when they first receive an SBA demand letter. The reason for this is often times, an SBA loan may require a certain level of collateral in order to receive the funds. Many failed business owners may be looking at the possibility of losing their property, such as cars, valuable jewelry or even their home.
Fortunately, there are ways of avoiding things such as an SBA loan foreclosure and the seizing of person property or assets. However, it all starts with enlisting the help of a law firm that deals directly in SBA default issues.
Many times, an Offer in Compromise can be made and this sort of arrangement is rather sweeping. For example, an Offer in Compromise can help reduce a persons debt to the SBA significantly. In some cases, the remaining balance can be cut by over 50%. In some cases, an Offer in Comprise can include an affordable repayment plan. This can help prevent foreclosure or assets being seized. In addition, through a Tax Offset Program, any income tax refunds the guarantor of the loan may receive can be turned over to the SBA for default loan payments.
SBA loan default may not be the ideal thing, but it does happen. However, there is no reason to panic. With the help of a law firm advocating for you, the many avenues to reduce the amount you owe as well as the options in an Offer in Compromise for repayment, things may not be as bad as you first thought. If you are facing a possible default on your SBA loan, or it has already been defaulted on, you need legal advice today.
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 clients are personally guaranteed an SBA 7(a) loan. The SBA referred the debt to the Department of Treasury, which was seeking payment of $487,981 from our clients. We initially filed a Cross-Servicing Dispute, which was denied. As a result, we filed an Appeals Petition with the SBA Office of Hearings and Appeals asserting legal defenses and supporting evidence uncovered during the discovery and investigation phase of our services. Ultimately, the SBA settled the debt for $25,000 - saving our clients approximately $462,981.
Clients executed several trust deeds pledging seven (7) real estate properties and unconditional personal guarantees for an SBA 7(a) loan from the participating lender. The clients' small business failed and eventually defaulted on repayment of the loan exposing all collateral pledged by the clients. The SBA subsequently acquired the loan balance from the lender, including the right to liquidate and collect all pledged collateral pursuant to the trust deed instruments.
The Firm was hired to negotiate separate release of lien proposals for all 7 real estate properties. In preparation for the work assignment, the Firm Attorneys initiated discovery to secure records from the SBA and Treasury's Bureau of Fiscal Service. After reviewing the records and understanding the interplay between the lender and the SBA, the attorneys then prepared, submitted and negotiated the release of lien (ROL) for each of the 7 real estate properties for consideration.
After submitting the proposals, the assigned SBA Loan Specialists approved each ROL package - significantly reducing the total SBA debt claimed.
Client's small business obtained an SBA COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement. The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.
The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.
The Firm was hired to investigate and find an alternate solution to the bankruptcy option. After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.
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