SBA Forgiveness: What Small Business Owners Need to Know
With the guidance and support of experienced SBA loan attorneys from Protect Law Group, you can find a concrete path to SBA debt resolution. Learn now.
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Book a Consultation CallPursuant to 31 U.S.C. §§ 3711(g)(1)(B), 3711(g)(4), and 3711(g)(5), and the authority delegated to the Treasury Department’s Bureau of Fiscal Service (BFS) by the U.S. Department of Justice, BFS is authorized to take appropriate action to collect or compromise transferred debts.
With regard to debts that have been transferred to BFS for debt collection services, BFS has the same authority available to the head of the federal creditor agency to compromise transferred debts or collect transferred debts in installments.
In addition, the Department of Justice has delegated to BFS the authority to compromise debts with a principal balance of up to $500,000. BFS may accept proposed compromises of debts with a principal balance of over $500,000 only with the approval of the Department of Justice.
BFS may collect and/or compromise debts in accordance with applicable Federal law, including the Federal Claims Collection Standards (31 CFR Parts 900-904). Prior to transferring debts, the federal creditor agency must provide to BFS a detailed description of any agency or debt-specific laws, policies, and procedures that govern the compromise and/or collection of its debts. Therefore, any federal creditor agency debts, including SBA debts, that have been transferred to BFS, are eligible for compromise by the Treasury’s BFS, in accordance with applicable federal law and supporting regulations.
A BFS offer in compromise (OIC) is a written settlement agreement with the BFS for less than the full amount owed. Generally, it is based on the argument that you do not have the financial ability to pay back the federal creditor agency debt (along with the administrative fees) in full within a reasonable amount of time.
The BFS are required to use the same formula that the original federal creditor agency (such as the SBA) to determine an acceptable settlement amount. A cash offer in compromise can be made. Short term and longer term deferred repayment plans are also available if you are unable to pay the settlement amount in full.
You may qualify for an OIC and not know it. Treasury’s BFS employees generally will not tell you that you qualify or that a compromise offer proposal is even available for consideration. Or, a seemingly friendly BFS official may offer to “help” you prepare and process your own OIC only to discover the whereabouts of your remaining personal assets. Then, the BFS will use its own formula against you, reject your OIC and demand payment in full or simply seize your recently discovered assets through various collection tools, such as Administrative Wage Garnishment, Treasury Offset Program levy, or referral to the Department of Justice or Private Litigation Counsel for collection litigation in federal or state court.
Thus, it is important to find out if a BFS OIC is even an option as this may be the only vehicle that can possibly save you a lot of money. If you qualify, we prepare your OIC and aggressively advocate your interests with the BFS until a final decision is reached.
Contact us today for a Case Evaluation.
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.
Client's small business obtained an SBA COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement. The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.
The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.
The Firm was hired to investigate and find an alternate solution to the bankruptcy option. After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.
Clients executed several trust deeds pledging seven (7) real estate properties and unconditional personal guarantees for an SBA 7(a) loan from the participating lender. The clients' small business failed and eventually defaulted on repayment of the loan exposing all collateral pledged by the clients. The SBA subsequently acquired the loan balance from the lender, including the right to liquidate and collect all pledged collateral pursuant to the trust deed instruments.
The Firm was hired to negotiate separate release of lien proposals for all 7 real estate properties. In preparation for the work assignment, the Firm Attorneys initiated discovery to secure records from the SBA and Treasury's Bureau of Fiscal Service. After reviewing the records and understanding the interplay between the lender and the SBA, the attorneys then prepared, submitted and negotiated the release of lien (ROL) for each of the 7 real estate properties for consideration.
After submitting the proposals, the assigned SBA Loan Specialists approved each ROL package - significantly reducing the total SBA debt claimed.
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