Protect Law Group shares the comprehensive guide to SBA offers in compromise. Become informed now.
Book a Consultation CallFrom Protect Law Group, an SBA Offer in Compromise is a settlement agreement between a borrower and the Small Business Administration (SBA) wherein the borrower agrees to pay a reduced amount to satisfy their outstanding debt. It offers small business owners a chance to resolve financial issues and potentially avoid bankruptcy or foreclosure.
Eligibility
To be eligible for an SBA Offer in Compromise, borrowers must demonstrate financial hardship and an inability to repay the debt in full. Factors like their financial situation, asset value, and future income potential are evaluated.
Process
The process involves assessing the borrower's financial standing, consulting with an experienced SBA loan attorney, preparing and submitting a comprehensive offer, and negotiating a settlement with the SBA. Once an agreement is reached, fulfilling the settlement terms within the designated timeframe is crucial.
Benefits
Benefits of an SBA Offer in Compromise include debt reduction, allowing borrowers to repay a more manageable amount. However, it's important to be aware of the potential temporary impact on credit scores. Recovering from financial hardship and avoiding bankruptcy can help rebuild credit in the long run. Compliance with the settlement terms is essential to prevent the revival of the original debt.
Helping You Succeed
Small business owners facing overwhelming financial burdens due to defaulting on SBA loans can benefit from considering an SBA Offer in Compromise, a type of SBA loan forgiveness. By understanding the process, eligibility criteria, and advantages, they can take the necessary steps to explore this debt relief option.
Consultation with legal professionals specializing in small business administration loans can increase the chances of a successful negotiation. Don't let the stress of debt hinder your entrepreneurial spirit—explore the possibilities of SBA debt relief today.
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 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.
Client’s small business obtained an SBA 7(a) loan for $150,000. He and his wife signed personal guarantees and pledged their home as collateral. The SBA loan went into default, the term or maturity date was accelerated and demand for payment of the entire amount claimed was made. The SBA lender’s note gave it the right to adjust the default interest rate from 7.25% to 18% per annum. The business filed for Chapter 11 bankruptcy but was dismissed after 3 years due to its inability to continue with payments under the plan. Clients wanted to file for Chapter 7 bankruptcy, which would have been a mistake as their home had significant equity to repay the SBA loan balance in full as the Trustee would likely seize and sell the home to repay the secured and unsecured creditors. However, the SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection to the SBA. Clients then received the SBA Official 60-Day Notice and hired the Firm to respond to it and negotiate on their behalf. Clients disputed the SBA’s alleged balance of $148,000, as several payments made to the SBA lender during the Chapter 11 reorganization were not accounted for. To challenge the SBA’s claimed debt balance, the Firm Attorneys initiated expedited discovery to obtain government records. SBA records disclosed the true amount owed was about $97,000. Moreover, because the Clients’ home had significant equity, they were not eligible for an Offer in Compromise or an immediate Release of Lien for Consideration, despite being incorrectly advised by non-attorney consulting companies that they were. Instead, our Firm Attorneys recommended a Workout of $97,000 spread over a lengthy term and a waiver of the applicable interest rate making the monthly payment affordable. After back and forth negotiations, SBA approved the Workout proposal, thereby saving the home from imminent foreclosure and reducing the Clients' liability by nearly $81,000 in incorrect principal balance, accrued interest, and statutory collection fees.
Our firm successfully resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) default in the amount of $150,000 on behalf of Illinois-based client. After the business permanently closed due to the economic impacts of the pandemic, the owners faced potential personal liability if the business collateral was not liquidated properly under the SBA Security Agreement.
We guided the client through the SBA’s Business Closure Review process, prepared a comprehensive financial submission, and negotiated directly with the SBA to release the collateral securing the loan. The borrower satisfied their collateral obligations with a payment of $2,075, resolving the SBA’s security interest.
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