Are you unsure of whether or not you need an SBA offer in compromise? Our team is here to help advise you as to when to seek out an offer in compromise.
Book a Consultation CallCurrently, the world faces unprecedented challenges. For many, these challenges have made it difficult to stay on top of SBA loan payments. In these difficult economic times, your business may not survive. Fortunately, you have options if you fall behind. If you need SBA loan relief, you may find that you qualify for an SBA Offer in Compromise (OIC). An OIC allows you to settle your SBA loan obligation for less than the total balance.
To learn more about when to seek out an Offer in Compromise, keep reading.
Offer in Compromise
The SBA doesn’t approve all requests for a settlement. For this reason, it’s a good idea to seek professional help so that you have the best chance of the agency accepting your request.
With an Offer in Compromise, you can settle your SBA debt for less than the full amount owed.
It’s a viable option if you cannot pay your SBA debt in full. For example, paying your SBA loan guarantee might cause financial hardship.
The SBA will consider several things when deciding whether to accept your settlement. As an example, they’ll assess your ability to pay your obligation.
They’ll also evaluate your current income and expenses. Furthermore, they’ll make a review of your existing assets.
Typically, the SBA will accept an OIC claim when the amount offered is what the agency deems reasonable to collect within a certain amount of time.
However, an Offer in Compromise is not for everyone who’s behind on their SBA loan. For example, if you apply for settlement, it’s important that you’re not filing for bankruptcy
For these reasons and others, it may prove prudent to seek professional help when applying for an Offer in Compromise. However, it’s equally as important to choose an SBA professional that’s skilled and experienced.
The Offer in Compromise program is legitimate and viable. The SBA doesn’t want to wait ten years to collect payments. Still, the agency understands that some people simply cannot afford to pay their full SBA loan obligation.
For this reason, the SBA provides the Offer in Compromise program to give certain individuals and businesses a fresh start. Under the program, the SBA will accept a settlement amount. The agency will then write off the remaining debt.
However, it’s important to understand that an Offer in Compromise is not an exercise in diplomacy. When you apply for an Offer in Compromise, it’s also not an arena to test your negotiating skills.
Some people mistakenly think that they can use negotiation tactics to solicit the best offer from the SBA. For instance, they may plan to start out making a lowball offer.
Alternatively, they may portray themselves as stubborn and walk away from discussing the Offer in Compromise on one or more occasions. By deploying these tactics, they believe that they can arrange a better deal.
However, the SBA determines the viability of a request for a settlement using math and legal factors called "litigative risks". They use a formula to determine the terms of an Offer in Compromise based on your allowable expenses, assets, and income. The same formula applies to every request.
Using the formula, SBA loan specialists determine the amount deemed reasonable to collect. They will not take an amount lower than what they determine using the formula. For this reason, it’s important to work with a legal professional who can help you to apply the formula correctly as well as assert legal defenses in your favor.
An experienced SBA attorney can help you calculate the correct amount when requesting a settlement. They understand the standards used by the SBA. For example, an experienced attorney knows what expenses you can deduct and which ones you cannot.
There are some gray areas in this regard. However, even the gray areas are based on clearly outlined allowed expenses.
When searching for counsel, stay away from any advisor who promises they can secure an Offer in Compromise without reviewing your situation. Nevertheless, an Offer in Compromise is worth considering if you’ve exhausted all other options. If you have minimal assets, live modestly, and have financial trouble, an Offer in Compromise may help you .
Now you know more about the SBA Offer in Compromise program. What you need now is an attorney that can guide you through the process.
Protect Law Group specializes in representing small business owners and federal debtors across the United States. We’ve helped companies resolve millions of dollars in debt.
Find out the best option for resolving your SBA-related debt. Contact a Protect Law Group attorney today at (833) 428-0933 or connect with us online to schedule a case evaluation.
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 and guarantors obtained an SBA COVID-EIDL loan for $1,000,000. Clients defaulted causing SBA to charge-off the loan, accelerate the balance and refer the debt to Treasury's Bureau of Fiscal Service for collection. Treasury added nearly $500,000 in collection fees totaling $1,500,000. Clients were served with the SBA's Official 60-Day Notice and exercised the Repayment option by applying for the SBA’s Hardship Accommodation Plan. However, their application was summarily rejected by the SBA without providing any meaningful reasons. Clients hired the Firm to represent them against the SBA, Treasury and a Private Collection Agency. After securing government records through discovery, we filed an Appeals Petition with the SBA Office of Hearings & Appeals (OHA) court challenging the SBA's referral of the debt to Treasury. During litigation and before the OHA court issued a final Decision and Order, the Firm successfully negotiated a reinstatement and recall of the loan back to the SBA, a modification of the original repayment terms, termination of Treasury's enforced collection and removal of the statutory collection fees.
Our firm successfully negotiated an SBA offer in compromise (SBA OIC), settling a $974,535.93 SBA loan balance for just $18,000. The offerors, personal guarantors on an SBA 7(a) loan, originally obtained financing to purchase a commercial building in Lancaster, California.
The borrower filed for bankruptcy, and the third-party lender (TPL) foreclosed on the property. Despite the loan default, the SBA pursued the offerors for repayment. Given their limited income, lack of significant assets, and approaching retirement, we presented a strong case demonstrating their financial hardship.
Through strategic negotiations, we secured a favorable SBA settlement, reducing the nearly $1 million debt to a fraction of the amount owed. This outcome allowed the offerors to resolve their liability without prolonged financial strain.
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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