Small business owners acquire commercial loans to start their companies. These opportunities allow them to gain financing to purchase a location and merchandise needed to operate the business. When the owner can no longer manage this financial obligation, they need an SBA Offer in Compromise to avoid the negative impact of a default.
Essentially, an SBA offer in compromise is a settlement offer. The small business owner submits an application with their lender to acquire approval. The lender evaluates the financial circumstances of the business owner and identifies a value that is fair and reasonable. This value is based on a percentage of the total value owed to the lender. Upon acceptance of this value, the business owner submits the payment as specified.
An SBA loan default is the primary reason for seeking an offer in compromise. Once the loan is in default, the lender has the legal right to file a claim against the identified collateral. The collateral could include the building, machinery, and any inventory that was financed through the loan. If the borrower doesn't take action, the lender could seize the collateral and generate a major financial loss for the borrower. An SBA loan foreclosure is included in the available legal actions.
The borrower must hire an attorney to communicate with their lender. When hiring an attorney, the borrower must provide the SBA demand letter. The attorney discusses a possible settlement offer with the lender. In most cases, the lender will accept a lower value in order to settle the debt. Once it enters default, the lender may acquire a portion of the funds through an insurance settlement. When this is the case, it gives the borrower leverage over their case.
Small business owners need commercial loans to open their companies. These financing opportunities are available to any party that has a lucrative business venture. However, the mismanagement of their finances could lead to a default. When this happens, foreclosure is an almost certainty. Small business owners who need a settlement offer or to participate in a Tax Offset Program should contact an attorney 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.
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.
Clients obtained an SBA 7(a) loan for their small business in the amount of $298,000. They pledged their primary residence and personal guarantees as direct collateral for the loan. The business failed, the lender was paid the 7(a) guaranty money and the debt was assigned to the SBA. Clients received the Official 60-Day Notice giving them a couple of options to resolve the debt balance directly with the SBA before referral to Treasury's Bureau of Fiscal Service. The risk of referral to Treasury would add nearly $95,000 to the SBA principal loan balance. With the default interest rate at 7.5%, the amount of money to pay toward interest was projected at $198,600. Clients hired the Firm with only 4 days left to respond to the 60-Day due process notice. Because the clients were not eligible for an Offer in Compromise (OIC) due to the significant equity in their home and the SBA lien encumbering it, the Firm Attorneys proposed a Structured Workout to resolve the SBA debt. After back and forth negotiations, the SBA Loan Specialist assigned to the case approved the Workout terms which prevented potential foreclosure of their home, but also saved the clients approximately $294,000 over the agreed-upon Workout term with a waiver of all contractual and statutory administrative fees, collection costs, penalties, and interest.
Client personally guaranteed SBA 7(a) loan balance of $58,000. The client received a notice of Intent to initiate Administrative Wage Garnishment (AWG) Proceedings. We represented the client at the hearing and successfully defeated the AWG Order based on several legal and equitable grounds.
.jpg)
