What Is SBA Loan Forgiveness and How Does It Work?
Learn how SBA loan forgiveness works and how it can help small business owners facing financial difficulties. Contact us today for a case evaluation.
Small businesses that are facing financial difficulties need help through legal services. These opportunities could prevent them from losing their business location and possibly their machinery used by their company. When serious delinquencies arise, these businesses have the opportunity to acquire an SBA Offer in Compromise
After the company defaults, the business owner could face foreclosure. This legal process allows the lender to seize the property financed by the loan. If the process continues, the lender will auction the property off and collect through the sale. If they don't recover the full balance of the loan, the lender could file a claim against the borrower through the court. For this reason, the borrower must take action as soon as an SBA loan default begins.
A loan default gives the lender the right to collect the collateral immediately. Once they collect the collateral, the foreclosure or repossession of the property appears on the borrower's credit report. This listing could lead to a reduction in the credit score. A lower credit score could prevent the borrower from starting new lines of credit. This includes new loans to recover from any financial losses. Once the borrower receives the SBA demand letter these circumstances are immediate.
The first step is to approach an attorney. The attorney evaluates the SBA loan documentation to determine if the terms of the loan are predatory. They determine if it is possible to acquire a loan modification first. If this action could settle the issue, the attorney continues with the process. However, if it is necessary to arrive at a settlement, the attorney submits the application for the offer in compromise to prevent an SBA loan foreclosure.
Small business owner evaluates opportunities to avoid foreclosure by consulting an attorney. An attorney could help them evaluate opportunities to settle their SBA loan debt. Among these opportunities are loan modifications and an offer of compromise. These actions reduce the negative impact of a default and prevent further financial damage for the business owner. Any owners who need a Tax Offset Program or additional help 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.
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.
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.
Clients personally guaranteed an SBA 7(a) loan that was referred to the Department of Treasury for collection. Treasury claimed our clients owed over $220,000 once it added its statutory collection fees and interest. We were able to negotiate a significant reduction of the total claimed amount from $220,000 to $119,000, saving the clients over $100,000 by arguing for a waiver of the statutory 28%-30% administrative fees and costs.
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