Learn the vital role of personal guarantors in SBA loan defaults. Discover strategies, legal implications, and ways to navigate defaulted SBA loans effectively.
Book a Consultation CallIn the realm of Small Business Administration (SBA) loans, understanding the critical role of personal guarantors amid defaults is paramount. This comprehensive guide navigates the intricacies, responsibilities, and strategies essential for individuals associated with SBA loans and highlights the significance of personal guarantors in these circumstances.
Personal guarantors serve as a protective shield for lenders, offering assurance of repayment in cases of SBA loan defaults. Their commitment plays a pivotal role in securing loans, emphasizing the importance of understanding the weight of their responsibilities in such financial arrangements.
When an SBA loan defaults, personal guarantors face potential financial risks. They become liable for the unpaid debt, subjecting their assets and finances to potential collection actions by the lender or SBA to recover outstanding amounts.
Navigating through defaulted SBA loans requires strategic action from personal guarantors. Seeking legal counsel, negotiating settlements, or exploring compromise options can mitigate the repercussions and offer avenues for resolution amid challenging circumstances.
Engaging legal expertise becomes crucial for personal guarantors entangled in SBA loan defaults. Legal professionals well-versed in SBA loan matters offer guidance, negotiation prowess, and explore legal avenues to shield guarantors' interests effectively.
Understanding the pivotal role of personal guarantors in SBA loan defaults is crucial for individuals associated with such financial arrangements. This article elucidates their responsibilities, implications of defaults, mitigation strategies, and the importance of legal support, providing a comprehensive roadmap for navigating through the complexities of defaulted SBA loans effectively.
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.
Our firm successfully negotiated an SBA offer in compromise (SBA OIC), settling a $974,535.93 SBA loan balance for just $18,000. The offerors, personal guarantors on an SBA 7(a) loan, originally obtained financing to purchase a commercial building in Lancaster, California.
The borrower filed for bankruptcy, and the third-party lender (TPL) foreclosed on the property. Despite the loan default, the SBA pursued the offerors for repayment. Given their limited income, lack of significant assets, and approaching retirement, we presented a strong case demonstrating their financial hardship.
Through strategic negotiations, we secured a favorable SBA settlement, reducing the nearly $1 million debt to a fraction of the amount owed. This outcome allowed the offerors to resolve their liability without prolonged financial strain.
Client 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 his 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.
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.
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