ECOA May Provide A Defense To The Personal Guarantee Of A Spouse

We provide individuals who are facing an SBA loan default with solutions. We will analyze your SBA loan problems and advise you on potential solutions such as an SBA offer in compromise.

Dealing with the idea that you might be facing an SBA loan default can be terrifying.  The SBA attorneys in our office are skilled at helping clients understand all the facets of their situation.  We will advise you as to the potential for an SBA offer in compromise.  You should never face your SBA loan problems alone.  It is important to retain the services of an attorney who can help you through this difficult time in your life.  Please contact us for a free initial consultation.

Many times the SBA will require a borrower's spouse to sign a personal guarantee even when the spouse has no role in the borrower's business.  The Equal Credit Opportunity Act (“ECOA”) provides important protections to “disinterested spouses” who are required to guarantee the business loans of their spouses. Regulation B provides that a lender may not automatically require a qualified applicant’s spouse to execute any loan documents.  In a community property state, such as California, the lender may be able to require the spouse’s signature, but only after first conducting a separate analysis of the income and assets of the business, and the income and assets of the interested spouse, and then reviewing the jointly owned assets.  Although there is a two year statute of limitations on bringing a claim based on an ECOA violation, such a violation can be raised at any time as a defense.   As such, a disinterested spouse that was required to sign a personal guarantee may be able to defend against enforcement based on a ECOA violation defense.