Local Relationships Result in Lower SBA Loan Default Rates
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.
At Protect Law Group, we are proud to be the go-to law firm for small business owners facing loan challenges. If your business is struggling to make loan payments, you may be dreading the possibility of defaulting on your SBA loan. Your thoughts may be running wild with questions such as, “what happens if I can’t keep up with my SBA payments?” or “what are the consequences of defaulting?”
If you’re wondering what happens when you default on an SBA loan, you’re not alone. In today’s blog, we’re discussing four important things you need to know about defaulting on an SBA loan. Keep reading to learn more, then reach out to our SBA loan attorneys today.
Your Creditor has the Right to Accelerate Payments
When you default on an SBA loan, the creditor has the right to immediately demand payment on the entire balance of the loan. This means that even if there are more payments due on the loan, they can now be immediately due and payable. This can be a massive financial burden for any small business owner to bear.
You Are Liable for Collection Costs
As part of the loan documents, you likely agreed that you would be liable for the costs associated with the creditor collecting the loan in case of a default. This can include attorney’s fees and other collection costs.
Defaulted Loans Can Hurt Your Credit Score
Along with financial repercussions, defaulting on an SBA loan can also have a negative impact on your credit score. A defaulted loan appears on your credit report and affects your credit score, making it more difficult to get loans or credit in the future.
Defaulted Loans Can Lead to Legal Action
Just as defaulting on a loan could seriously damage your credit, it can also trigger legal action. If your creditor is unable to collect the loan balance, they may take legal action against you. In extreme cases, your assets may be seized, or your wages could be garnished.
Defaulting on an SBA loan can have serious consequences if not handled carefully. Thankfully, we offer the SBA loan help you need to get through the difficulty and find relief. Business debt relief is possible — and our SBA loan attorneys can help provide you with the assistance you need to navigate the nuances of a difficult system and get the loan forgiveness you need.
At Protect Law Group, our passionate SBA loan attorneys have the knowledge and experience to help guide you through the legal process and identify the best solution for your financial situation. From SBA loan investigation and discovery to deferment and modification, our mission is to ensure you have advice tailored to suit your needs. If you have any questions regarding defaulting on an SBA loan or what you can do in your specific situation, don’t hesitate to contact us now!
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.
Small business sole proprietor obtained an SBA COVID-EIDL loan for $500,000. Client defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for aggressive collection. Treasury added $180,000 in collection fees totaling $680,000+. Client tried to negotiate with Treasury but was only offered a 3-year or 10-year repayment plan. Client hired the Firm to represent before the SBA, Treasury and a Private Collection Agency. After securing government records through discovery and reviewing them, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury citing a host of purported violations. The Firm was able to negotiate a reinstatement and recall of the loan back to the SBA, participation in the Hardship Accommodation Plan, termination of Treasury's enforced collection and removal of the statutory collection fees.
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.
Clients personally guaranteed an SBA 7(a) loan that was referred to the Department of Treasury for collection. Treasury claimed our clients owed over $220,000 once it added its statutory collection fees and interest. We were able to negotiate a significant reduction of the total claimed amount from $220,000 to $119,000, saving the clients over $100,000 by arguing for a waiver of the statutory 28%-30% administrative fees and costs.
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