SBA Loan Default and the SBA Disaster Relief Loan
We will analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise.
You may have learned that your defaulted SBA loan was "charged off". You are still liable for the loan deficiency, however, and competent legal counsel is highly recommended.
The transcript of the video follows below for further review.
What is SBA's Policy Regarding Charge Off Accounts? Many times people think that because their defaulted SBA loan has been “charged off” they are not longer liable to the SBA. Unfortunately, this is not the case. “Charge off” is the process by which SBA recognizes a loss and removes the uncollectible loan account from its active receivable accounts. The SBA's policy is to be diligent and thorough in collection of debt and to promptly charge off all uncollectible accounts to more accurately reflect the status of the individual account and the Agency's entire portfolio. It should be noted that a charge off is merely an administrative determination that does NOT affect SBA's rights against any obligor nor reduce the SBA's (or a participant lender's) ability to proceed with any available remedy. A charge off is justified when the third party lender has complied with all requirements of collection and liquidation and further collection of any substantial portion of the debt is doubtful. The determination to justify a charge off may be based on one or more of the following:
a) The third party lender has exhausted all efforts in cost-effective recovery from:
Voluntary payments from the borrower;
Liquidation of collateral;
Compromise with obligor leaving only a deficiency balance; and
Consideration has been given to any legal remedies available so that no further reasonable expectation of recovery remains.
b) Estimated costs of future collection exceed any anticipated recovery;
c) Obligor cannot be located or is judgment proof;
d) The Lender/SBA's rights have expired (e.g., statute of limitations, restrictions of State law, Agency policy);
e) Debt is legally without merit;
f) Adjudication of a Chapter 7 Bankruptcy as a no asset case, or completion of Chap 11/13 case;
g) The inability of the Lender to effect further worthwhile recovery.
If your defaulted SBA loan has been charged off you will still need an experienced attorney to help negotiate a settlement. Contact Protect Law Group today at (888) 756-9969 or at www.sba-attorneys.com and schedule your consultation with an SBA workout attorney.
We analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise for your SBA loan default.
Helping provide real solutions to individuals who are facing SBA loan problems. Contact one of our experienced SBA Attorneys and Federal Agency Practitioners today for a Case Evaluation - (888) 756-9969.
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.
Our firm successfully facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) where borrower received an SBA disaster loan of $150,000, but due to the severe economic impact of the COVID-19 pandemic, the business was unable to recover.
Despite the borrower’s efforts to maintain operations, shutdowns and restrictions significantly reduced the customer base and revenue, making continued operations unsustainable. After a thorough business closure review, we negotiated with the SBA, securing a resolution where the borrower paid only $6,015 to release the collateral, with no further financial liability for the owner/officer.
This case demonstrates how businesses affected by the pandemic can navigate SBA loan settlements effectively. If your business is struggling with an SBA EIDL loan, we specialize in SBA Offer in Compromise (SBA OIC) solutions to help close outstanding debts while minimizing financial burden.
The clients are personally guaranteed an SBA 7(a) loan. The SBA referred the debt to the Department of Treasury, which was seeking payment of $487,981 from our clients. We initially filed a Cross-Servicing Dispute, which was denied. As a result, we filed an Appeals Petition with the SBA Office of Hearings and Appeals asserting legal defenses and supporting evidence uncovered during the discovery and investigation phase of our services. Ultimately, the SBA settled the debt for $25,000 - saving our clients approximately $462,981.
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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