Congress Approves Emergency SBA Lending Limit
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.
Contact Our SBA Attorneys for Nationwide Representation of SBA and Treasury Debt Problems
Book a Consultation CallIf you recently received the 60-Day Official Notice from the SBA offering you the opportunity to petition for an administrative review of the debt, make an SBA Offer in Compromise or enter into a Repayment agreement for an SBA loan default, you may not know which way to turn. Not only has your SBA debt come back to haunt you but if you fail to respond to the 60-Day Official Notice within the stated time frame, your case will be cross-referred to the Department of Treasury’s Bureau of Fiscal Service, where the Government will add statutory collection fees up to 32% of the original SBA principal and interest balance.
An SBA Offer in Compromise is an out-of-court settlement option for a personal guarantor whose small business is about to shut down and there is no reasonable turnaround plan that can be executed to resurrect it from its current financial quandary. Furthermore, this remedial option is best utilized when it is apparent that the small business’s pledged collateral is insufficient to pay off the outstanding SBA loan balance and the personal assets of the owners are at stake due to the unconditional guarantees that were signed.
An SBA Offer in Compromise (OIC) is not possible without the cooperation of the responsible Borrowers and Guarantors. One of the basic elements of an SBA OIC is that the small business has ceased operations and all business assets have been liquidated. The small business owner’s assistance and help in maximizing the recovery on the business assets can help minimize the amount of deficiency balance on the SBA loan.
The amount offered for settlement must bear a reasonable relationship to the estimated value of the projected amount of recovery available through enforced collection. An SBA OIC is not available when the obligor has the financial ability to pay the deficiency in full within a reasonable time frame. An SBA OIC cannot be accepted if there is any evidence or knowledge of fraud, substantial misrepresentation, or financial dishonesty on the part of the offeror.
Each individual SBA OIC will be based on a case by case review of the Borrower’s or Guarantor’s individual financial situation and certain “litigative risks.” Factors to be considered are:
• An assessment of the debtor’s ability to pay and potential earnings capacity
• Health and life expectancy
• Local economic conditions
• Equity in pledged or reachable assets
• Settlement arrangements with other creditors
• Applicable exemptions available to debtor under State and Federal law
• The cost, time and risk of collection litigation
If you received the SBA’s 60-Day Official Notice providing you with an opportunity to submit an SBA OIC, don’t do it alone. Hire a qualified SBA Attorney to help your through this difficult and complex process.
Contact us today for a Case Evaluation.
An SBA Offer in Compromise (OIC) is not possible without the cooperation of the responsible Borrowers and Guarantors. One of the basic elements of an SBA OIC is that the small business has ceased operations and all business assets have been liquidated. The small business owner’s assistance and help in maximizing the recovery on the business assets can help minimize the amount of deficiency balance on the SBA loan.
The amount offered for settlement must bear a reasonable relationship to the estimated value of the projected amount of recovery available through enforced collection. An SBA OIC is not available when the obligor has the financial ability to pay the deficiency in full within a reasonable time frame. An SBA OIC cannot be accepted if there is any evidence or knowledge of fraud, substantial misrepresentation, or financial dishonesty on the part of the offeror.
Each individual SBA OIC will be based on a case by case review of the Borrower’s or Guarantor’s individual financial situation and certain “litigative risks.” Factors to be considered are:
• An assessment of the debtor’s ability to pay and potential earnings capacity
• Health and life expectancy
• Local economic conditions
• Equity in pledged or reachable assets
• Settlement arrangements with other creditors
• Applicable exemptions available to debtor under State and Federal law
• The cost, time and risk of collection litigation
If you received the SBA’s 60-Day Official Notice providing you with an opportunity to submit an SBA OIC, don’t do it alone. Hire a qualified SBA Attorney to help your through this difficult and complex process.
Contact us today for a Case Evaluation.
Clients personally guaranteed SBA 7(a) loan balance of over $300,000. Clients also pledged their homes as additional collateral. SBA OIC accepted $87,000 with the full lien release against the home.
Client personally guaranteed SBA 7(a) loan for $150,000. COVID-19 caused the business to fail, and the loan went into default with a balance of $133,000. Client initially hired a non-attorney consultant to negotiate an OIC. The SBA summarily rejected the ineligible OIC and the debt was referred to Treasury’s ureau of Fiscal Service for enforced collection in the debt amount of $195,000. We were hired to intervene and initiated discovery for SBA and Fiscal Service records. We were able to recall the case from Fiscal Service back to the SBA. We then negotiated a structured workout with favorable terms that saves the client approximately $198,000 over the agreed-upon workout term by waiving contractual and statutory administrative fees, collection costs, penalties, and interest.
Our firm successfully resolved an SBA COVID-19 Economic Injury Disaster Loan (EIDL) in the original amount of $150,000 for a Florida-based borrower. The loan, issued on June 4, 2020, was secured by business assets and potential personal liability through the SBA's Security Agreement.
Following the permanent closure of the business, we guided the client through the SBA’s Business Closure Review process and prepared a comprehensive collateral analysis. We negotiated directly with the SBA, obtaining a full release of the business collateral for $2,910 — satisfying the borrower’s obligations under the Security Agreement and eliminating any further enforcement risk against the pledged assets.
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