Factors considered in an SBA Offer in Compromise review
We help people who need to avoid SBA loan default by teaching them about SBA offer in compromise and about various SBA loan problems
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.
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.
Clients personally guaranteed SBA 504 loan balance of $750,000. Clients also pledged the business’s equipment/inventory and their home as additional collateral. Clients had agreed to a voluntary sale of their home to pay down the balance. We intervened and rejected the proposed home sale. Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.
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.
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