Are you struggling with an SBA loan default?
The shuttering of your business and the seizure and liquidation of its assets can be a painful and emotional time for many entrepreneurs. However, it is only when the borrower is reminded that they also pledged personal assets to the SBA that they begin to realize how much worse things can get. The Perliski Law Group offers several options that may be of benefit:
SBA Loan Modification
Not all businesses run smoothly after start-up. In fact, at some point, many entrepreneurs run into trouble and cannot make the payments on their SBA loan. Lenders are not anxious to rewrite the terms of their loan, nor is the SBA. However, given the choice between a bad loan and a workout, lenders at larger institutions may find a workout plan and loan modification proposal preferable.
If you are facing an SBA loan default, the Perliski Law Group will use their best-efforts to negotiate a workout plan and loan modification with the SBA lender. The process is not quick and requires a strong commitment from the borrower, but can be an effective solution if the lender is approached early enough.
What types of loan modifications are available for SBA Loans?
1. Temporary/permanent reduction of interest.
2. Defer payments and/or principal only.
3. Extend Maturity Date to reduce payments.
4. Temporary Reduction of Payments.
5. Re-amortize loan payments
What is the SBA’s policy on loan modifications. Do these really happen?
Authorization and guidelines for an SBA loan modification may be found at: Standard Operation Procedure 50-50-4, Chapter 5, paragraphs 8(a), 15(a), 16(a), 17 as well as Chapter 7, Paragraphs 5(b) – 5(h).
If you need help with an SBA loan default, or just have questions about SBA debt relief options, contact the SBA loan default attorneys at the Perliski Law Group. We may be reached at (214) 446-3934 or using the Contact Form on this page.
SBA Offer in Compromise
For the vast majority of shell-shocked small business owners, the closure of their business and the liquidation of its assets does not bring an end to the traumatic default process. While the SBA guaranty may protect the lender, it does nothing to protect the business owner and other guarantors on the SBA loan. Subsequent collection efforts can result in the loss of assets or even wage garnishment by the U.S. Treasury. SBA loans are dischargeable in bankruptcy, but bankruptcy is not the only option for dealing with an SBA loan default.
During the critical time after your business assets have been liquidated and before any further litigation has been commenced, it is often possible to enter into settlement negotiations with the lender and the SBA to completely resolve the remaining loan deficiency for a fraction of the total amount due. SBA loan default help is available. This process is referred to as the SBA Offer in Compromise program.
We provide the following legal services in our SBA Deficiency Resolution package:
1. Review your Case for Settlement though the SBA Offer in Compromise Program
2. Review your original SBA loan documents
3. Collect financial documentation, including a complete lists of assets and liabilities
4. Notify your lender or the SBA of your intent to Settle
5. Prepare SBA Form 1150 (Offer in Compromise)
6. Prepare SBA Form 770 (Financial Statement of Debtor)
7. Review all financial data and recommend a Settlement Offer Amount to Borrower
8. Prepare and file the Offer in Compromise with your lender or the SBA, as appropriate
9. Negotiate with the lender or SBA to effectuate a settlement
What are the chances the SBA will accept my offer?
The SBA is not required by law to accept an Offer in Compromise from any borrower. However, the SBA knows a certain percentage of loans will fail and it is for this reason that the SBA Offer in Compromise program exists. Keep in mind that the SBA is looking for the “best deal” it can get. If your offer provides them with a quick, cost-effective, resolution to the matter that is superior to what they might receive over a five year period using enforced collection methods, they will seriously consider it.
Is there anything I can do to help my chances?
Yes, there is one thing. Prompt action increases the likelihood that your offer will be successful. If you receive a 60-day demand notice from the SBA, its important that you take action. If you wait too long to initiate settlement discussions, the SBA may transfer your account to the U.S. Treasury Department’s Treasury Offset Program (TOP). Under top your IRS tax refund can be seized and your wages garnished. Even your Social Security benefits can be offset.
If you need help with an SBA loan default, or just have questions about how the SBA offer in compromise program works, contact the SBA loan default attorneys at the Perliski Law Group. We may be reached at (214) 446-3934 or using the Contact Form on this page.
SBA Lien Release
Many debtors file bankruptcy only to find out that while their SBA loan debt was discharged, the SBA lien on their homestead (pledged as collateral for the loan) was not. What to do?
Is there a Statute of Limitations on Foreclosure by the SBA?
You may be surprised to learn that the SBA does not always urge foreclosure even when the SBA lender has the right to do so. In many cases, an SBA lien can remain on real estate for years without any action being taken to foreclose. However, you may also be surprised to learn that under federal law there is no statute of limitations applicable to the SBA that would bar a foreclosure action – even 20 years later!
Why doesn’t the SBA just foreclose and get it over with?
Frequently, the SBA may just let the property sit and take no action to foreclose; this may be because there is very little equity in the property. In other cases, it may just be easier for the SBA to conserve its resources and wait until you need to sell or refinance your property. In fact, most debtors first learn that the SBA lien on their home survived bankruptcy when they later attempt to sell or refinance their home.
What will it take for the SBA to release the lien on my home?
The answer will depend on many factors, but principally on how much equity is in your home and whether the SBA lien is sitting in second or third position behind other mortgages making a recovery from foreclosure unlikely. However, negotiating a settlement is possible, but you should be prepared to offer at least 70% or more of the equity in your property to get the lien removed. In some cases, the payments may be taken over time, but in the vast majority of cases, a lump sum payment is the norm.
If you have filed bankruptcy and need he help removing an SBA lien on your homestead, contact the SBA loan default attorneys at the Perliski Law Group. We may be reached at (214) 446-3934 or using the Contact Form on this page.