Can a Business Loan be Forgiven if the Business Fails?
Discover key factors regarding business loan repayment obligations after a business failure. Explore SBA loan forgiveness options and consult with Protect Law Group.
The federal Small Business Administration does a lot of important work for the nation's economy, advocating for and educating the founders and operators of hundreds of thousands of small companies. One of the SBA's most popular service offers is its loan program, an option that can see borrowers gaining access to credit at favorable terms where they might otherwise have been denied. While the program itself is therefore fairly generous, an SBA loan default is typically a serious matter, as the agency has a variety of ways of recouping money that might normally be drained from its coffers.
Borrowers who have failed to keep up with payments typically receive ample notice before things become more serious, however. By the time an SBA demand letter arrives in a borrower's hands, it is best to have already begun making arrangements to satisfy the obligation. Avoiding an SBA loan foreclosure or other harsh measure should almost always be a high priority, and it can be much easier to do so when skilled assistance is available.
The fact is that many borrowers have options beyond finding the money needed to fully satisfy a loan. While it can be difficult for laypersons to extract concessions from SBA negotiators and agents, those who are informed about the law and the relevant norms often have much greater success.
What this often means in practice is that it can be a good idea to get in touch with an attorney once it becomes apparent that trouble is in the making. One commonly appealing option is for a business owner to settle a loan with lessened requirements compared to the original terms, a victory that can allow a company to continue instead of effectively being forced into bankruptcy.
Obtaining such an SBA Offer in Compromise can be challenging, but the results are frequently worth the effort that is put in. An acceptable offer can see a company and its owner freed from the threat of foreclosure or the confiscation of refunds under the Tax Offset Program, making it much easier to recover from financial difficulties. For these reasons and others, actively seeking out the best possible resolution is typically far superior to allowing things to run their course.
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 personally guaranteed an SBA 504 loan balance of $337,000. The Third Party Lender had obtained a Judgment against the clients. We represented clients before the SBA and negotiated an SBA OIC that was accepted for $30,000.
The client personally guaranteed an SBA 7(a) loan for $150,000. His business revenue decreased significantly causing default and an accelerated balance of $143,000. The client received the SBA's Official 60-day notice with the debt scheduled for referral to the Treasury’s Bureau of Fiscal Service for aggressive collection in less than 26 days. We were hired to represent him, respond to the SBA's Official 60-day notice, and prevent enforced collection by the Treasury and the Department of Justice. We successfully negotiated a structured workout with an extended maturity date that included a reduction of the 14% interest rate and removal of substantial collection fees (30% of the loan balance), effectively saving the client over $242,000.
Clients personally guaranteed SBA 504 loan balance of $750,000. Clients also pledged the business’s equipment/inventory and their home as additional collateral. Clients had agreed to a voluntary sale of their home to pay down the balance. We intervened and rejected the proposed home sale. Instead, we negotiated an acceptable term repayment agreement and release of lien on the home.
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