Private Collection Agencies: What You Need to Know
If you've defaulted on an SBA guaranteed loan, you'll be hearing from one of four private collection agencies contracted by the Treasury.
If you're interested in getting a business loan for your small business, there are some important do's and don'ts you'll need to keep in mind.
Book a Consultation CallSmall business loan approval rates are on the rise, and more small business owners are getting the full amount of the loan they're requesting.
If you're interested in getting a business loan for your small business, there are some important do's and don'ts you'll need to keep in mind.
These guidelines will help you make the right decisions and increase your chances of getting all the money you need to get your business off the ground.
Getting a business loan
Before diving into the specific dos and don'ts of getting a business loan, it's important to understand some of the different types of small business loans and their repayment terms
This involves receiving a lump sum of money that you will repay over a predetermined period of time with interest.
These SBA loans are guaranteed by the Small Business Administration. They typically have lower interest rates and longer repayment terms.
This gives you access to money up to a specific limit. You only pay interest on the money you've withdrawn.
As the name suggests, this type of loan is meant specifically to help you purchase the equipment you need for your business. The equipment serves as collateral for the loan.
Business credit cards are revolving lines of credit. You can draw from and repay them as often as needed. They're typically best when used for financing ongoing expenses like travel or utilities.
When it comes to seeking out a business loan for your small business, you must be sure to keep these guidelines in mind:
Small business owners who are aware of their business credit scores are 41 percent more likely to get approved when they apply for a business loan.
Your personal credit score makes a difference, too. It tells potential lenders a lot about your financial habits.
One of the easiest ways to keep your finances in check is to use a separate bank account for your business. Keeping them separate actually decreases your chances of being turned down for a loan, too.
There are lots of lenders out there. You can even find lots of online lenders with rates and repayment options that are in line with or better than the options offered by traditional banks and credit unions. Take your time and look at all the different choices before making a decision.
There are a lot of documents you'll need to have on hand when you're applying for a business loan. Some specific documents you ought to keep easily accessible include:
Carefully review what each loan requires and have that information ready to go so that you're prepared.
Many small business owners who are denied financing don't know why their applications get denied. These small business owners often tend to get turned down more than once, often because they don't learn from the mistakes they made the first time around.
There are more costs associated with a business loan than just the amount you're seeking to borrow. From interest rates to the APR, there are other costs you need to keep in mind. Use a loan calculator so that you understand the true cost of your loan before deciding whether or not it's right for you.
Finally, remember that you don't have to go through the loan application all by yourself. There's nothing wrong with taking advantage of all the resources out there and working with an expert.Â
Get in touch with someone at your local SBA office. They can put you in touch with a mentor who will give you the advice you need to increase your chances of getting approved.
At the same time, there are also some things you ought to avoid if you want to increase your chances of your loan request getting approved:
Many business owners make the mistake of only looking for loans from their local bank or credit union. Remember, there are lots of alternative lenders out there. Don't be afraid to seek them out.
No matter how optimistic you are, chances are your income is not going to be as high in your first year as you predict.
Go over your budget, then decrease your income by 25-50 percent. You'll be more likely to get approved for your loan if you're realistic.
At the same time, don't underestimate the expenses you'll be met with as you're getting your business off the ground. Go back over your budget and increase your expenses, just to be safe.Â
When you apply for a business loan, lenders will ask you how much money you want and what you're going to use it for.
Be specific about the amount you want and your intentions for that money. Don't beat around the bush -- lenders want to see that you've got a specific plan.
Finally, while there's nothing wrong with seeking out a loan from an alternative lender, it's still important to ensure that your potential lender is a reputable one. Remember, if their offer seems too good to be true, it probably is.
If you have defaulted on an SBA loan, our experienced SBA attorneys offer assertive legal representation.
We can help at Protect Law Group. Contact us today to schedule a consultation.
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 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.
Our firm successfully assisted a client in closing an SBA Disaster Loan tied to a COVID-19 Economic Injury Disaster Loan (EIDL). The borrower obtained an EIDL loan of $153,800, but due to the prolonged economic impact of the COVID-19 pandemic, the business was unable to recover and ultimately closed.
As part of the business closure review and audit, we worked closely with the SBA to negotiate a resolution. The borrower was required to pay only $1,625 to release the remaining collateral, effectively closing the matter without further financial liability for the owner/officer.
This case highlights the importance of strategic negotiations when dealing with SBA settlements, particularly for businesses that have shut down due to unforeseen economic challenges. If you or your business are struggling with SBA loan debt, we focus on SBA Offer in Compromise (SBA OIC) solutions to help settle outstanding obligations efficiently.
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.
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