Tips for Negotiating a Personal Guarantee
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.
Small business owners need to re-evaluate their finances when they face a loan default. This occurrence could lead to devastating effects for the business. When they have a loan default through the Small Business Administration, they could face more than just a financial loss. They could lose everything they own quickly. A SBA Offer in Compromise is the first step for avoiding a total loss.
If the lender accepts a settlement, the borrower could achieve closure for the loan. Their attorney works with their lender to identify the most acceptable compromise. The offer of compromise includes a balance that is less than the total balance and allows the business owner to settle the debt quickly. Once the offer is accepted, the business owner no longer has any obligation to the lender.
If the borrower chose bankruptcy, first they would have to qualify for their chosen chapter. If they select chapter 13, they are required to pay a fixed balance each month. If they cannot pay this balance each month, the case is dismissed. When this occurs, they are responsible for all debts included immediately. Since the bankruptcy case remains on their credit history for at least ten years, it prevents them from opening new lines of credit. For companies that are trying to rebuild after financial issues, this could have disastrous effects. This is why the borrower must choose a compromise instead of bankruptcy when they have a SBA loan default.
If the borrower doesn't manage the default, they could face foreclosure. The moment they receive the SBA demand letter the wheels are in motion already. At this point, the lender has the right to seize property to settle the debt. Through a SBA loan foreclosure, the lender could acquire the business property and all assets.
Small business owners need assistance before they default on their SBA loan. By taking earlier action, they could avoid potential hardships that could lead to financial ruin. Business owners who need to discuss a compromise or enter into a Tax Offset Program should contact an attorney immediately.
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.
Client received the SBA's Official 60-Day Notice for a loan that was obtained by her small business in 2001. The SBA loan went into default in 2004 but after hearing nothing from the SBA lender or the SBA for 20 years, out of the blue, she received the SBA's collection due process notice which provided her with only one of four options: (1) repay the entire accelerated balance immediately; (2) negotiate a repayment arrangement; (3) challenge the legal enforceability of the debt with evidence; or (4) request an OHA hearing before a U.S. Administrative Law Judge.
Client hired the Firm to represent her with only 13 days left before the expiration deadline to respond to the SBA's Official 60-Day Notice. The Firm attorneys immediately researched the SBA's Official loan database to obtain information regarding the 7(a) loan. Thereafter, the Firm attorneys conducted legal research and asserted certain affirmative defenses challenging the legal enforceability of the debt. A written response was timely filed to the 60-Day Notice with the SBA subsequently agreeing with the client's affirmative defenses and legal arguments. As a result, the SBA rendered a decision immediately terminating collection of the debt against the client's alleged personal guarantee liability saving her $50,000.
Clients borrowed and personally guaranteed an SBA 7(a) loan. Clients defaulted on the SBA loan and were sued in federal district court for breach of contract. The SBA lender demanded the Client pledge several personal real estate properties as collateral to reinstate and secure the defaulted SBA loan. We were subsequently hired to intervene and aggressively defend the lawsuit. After several months of litigation, our attorneys negotiated a reinstatement of the SBA loan and a structured workout that did not involve any liens against the Client's personal real estate holdings.
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.
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