Due Process Rights and Collecting on an SBA loan default
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.
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.
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.
Our firm successfully facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) f borrower received an SBA disaster loan of $150,000, but due to the severe economic impact of the COVID-19 pandemic, the business was unable to recover.
Despite the borrower’s efforts to maintain operations, shutdowns and restrictions significantly reduced the customer base and revenue, making continued operations unsustainable. After a thorough business closure review, we negotiated with the SBA, securing a resolution where the borrower paid only $6,015 to release the collateral, with no further financial liability for the owner/officer.
This case demonstrates how businesses affected by the pandemic can navigate SBA loan settlements effectively. If your business is struggling with an SBA EIDL loan, we specialize in SBA Offer in Compromise (SBA OIC) solutions to help close outstanding debts while minimizing financial burden.
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