If you are an investor in a company funded by a Small Business Administration ("SBA") loan, then you may wondering whether you are liable for the company debt should the business fail. The Borrower is principally responsible for repayment of the underlying promissory...
Yes, its is very likely, but not certain. If this is a concern, you should discuss with your attorney. Under the current law, an agency must deny credit to a delinquent, debtor unless this requirement is waived by the head of the agency or the Chief Financial Officer....
Owners with at least least a 20% stake in an SBA loan financed business will be required to execute a personal guarantee. This means that, as an owner, you are promising to pay the SBA lender and/or the government in the event the Borrower (your business) defaults and...
If you currently have an SBA Loan and you live in an area affected by a natural disaster, you may be entitled to relief. Hurricane, flood, wildfires, droughts, avalanches, landslides and earthquakes are just a few examples of the natural disasters that can cause the...
There is really no way to know. Period. There are so many variables: 1. Who handles your file; 2. What SBA office is handling your file; 3. Your level of cooperation with the lender, both real and perceived; 4. Whether you have liquid assets vulnerable to traditional...
If you default on an SBA loan, your lender will frequently file a lawsuit against the borrower and all guarantors. The lender does this as part of a mandated process to maximize recovery before requesting the SBA to honor their loan guarantee agreement. However, we...
In many states, it is standard practice for an SBA lender to ask a loan guarantor to pledge their home as collateral in connection with their unconditional guaranty. If the business loan you guarantee goes into default, your homestead could be at risk of foreclosure....
In general, you will need permission to sell your home if the SBA lender placed a lien when you took out your SBA loan. There are many circumstances under which you may need to sell a home with an SBA lien on it. Here are a few: I am changing jobs and must move out of...
In most cases people have invested a good portion of their life savings into the business now going under. Losing your business is a terrible thing. And, being faced with the prospect of repaying your SBA Business Loan with little or no savings and the loss of your...
We are frequently asked by business owners whether they can sell their business assets after an SBA loan default. The short answer is - yes, but the longer answer involves working with the your Lender to get permission to do so. Under your security agreement the...
Many people contact our law firm after receiving an SBA 60-day letter demanding that they pay the entire amount due under their company's defaulted SBA loan. And, time and time again, we hear, they protest claiming they only own 25% percent of the company and so...
Owing the federal government a debt can be a frightening experience. Once your defaulted SBA loan makes it was to the Treasury, it is likely that you will soon be contacted by one of the collection agencies that handles the collection of government debts. The calls...
Scenario 1. My business may close because I don't have enough working capital. If you are facing an SBA loan default, then you may want to consider selling your business. If your business has a good track record, but your business is starved for working capital, a...
Character Counts In order to qualify for the U.S. Small Business Administrations (SBA) loan programs, you and your partners must meet certain eligibility requirements? But, isn't good credit, a solid business plan and collateral enough? No, SBA also looks at your...
If the Small Business Administration (SBA) has accepted your offer in compromise, then congratulations are in order. But, be warned, you must follow the terms of your offer precisely and make all payments on time or risk default. In many cases we are approached by...
General notification Before referring a debt for collection by administrative offset, a creditor agency must provide each debtor with: (a) a written notification of the nature and the amount of the debt, the intention of the agency to collect the debt through...
If you received a Notice of Intent to Initiate Administrative Wage Garnishment (AWG), you must act quickly. You have a right to contest the garnishment action, but if you wish to have the garnishment action suspended pending a hearing on the matter, you must file a...
As a general rule, more so now than in the past, the Small Business Administration (SBA) will direct a Guarantor to submit their SBA offer-in-compromise package to the lender for preliminary review and approval. In fact, not in every office, but in some, lenders will...
Our attorneys routinely work with SBA loan defaults, so we all hear a lot of stories. But, not a week goes by where we don't get at least one caller who is absolutely shocked they received a 60-day demand letter from the SBA. You might wonder at their surprise...
When submitting an offer under the SBA Offer in Compromise program pursuant to SBA SOP 50 57, the SBA is trying to determine whether making you repay the loan in full will cause a hardship, at least that's the idea. A complete and accurate picture of your finances is...
We frequently talk to people who have filed bankruptcy in an effort to discharge the remaining balance due under the SBA Note. While the debt to the SBA may be dischargeable under the bankruptcy code, in most cases, the lien is not (lien stripping in a Chapter 13 with...
The SBA expects every 7(a) loan to be fully secured. Although, the SBA will not decline a request to guarantee a loan if the only unfavorable factor is insufficient collateral, provided all available collateral is offered. But, every SBA loan must be secured by all...
The Servicemembers Civil Relief Act (SCRA) may provide important benefits that can help you. This law protects your financial and legal affairs while you are on active duty military service. Among other things, the SCRA requires your SBA lender to provide you with...
That depends. There are indeed eligibility factors for financial assistance based on the activities of the owners and the historical operation of the business. As such, the business cannot have been: (a) a business that caused the government to have incurred a loss...
The answer depends on whether or not you satisfied your obligations to the federal government. If you signed an Unconditional Personal Guaranty for a commercial loan backed by the Small Business Administration (SBA), then you are responsible for the payment of the...
We have had quite a few clients ask us how a defaulted SBA loan might affect their business dealings with the government. In this post we are going to look at this question from the perspective of a client who has one or more contracts with the federal government...
Yes, it is possible, but the SBA does not have to do so. SBA guidelines do allow a Guarantor to substitute a lien on a new residence in exchange for releasing the lien on the Guarantor's existing residence. However, at a minimum, the following conditions must be...
The SBA Offer-in-Compromise process requires a guarantor to prepare a detailed financial statement and provide very detailed supporting documentation. In fact, the whole process feels a lot like applying for your loan all over again, but is quite the opposite....
The Lender did not do X and my lawyer says that I have rights. I hear something like the above at least twice a week. In nearly all cases a prospective client has been told they have rights, so are their lawyers just wrong? Yes and No. Invariably it is true that the...
Depending on whether you are in a community property state or not, all or part of your income may be liable for the debts of your spouse, even those incurred prior to marriage. However, you personally are not liable for his/her debts. Sometimes that is of small...
The 7(a) loan program is the SBA’s flagship loan guaranty program. In fiscal year (FY) 2013, the 7(a) loan program provided 46,399 federal loan guarantees on approximately $17.9 billion of privately originated small business loans. Congress established the SBA 7(a)...
What is a CDC/504 Loan? The Small Business Administration (SBA) has a loan program know as the "504 program". The 504 program helps small business owners purchase commercial real estate (e.g., a hotel/franchise or a small office building). Unlike the 7(a) program that...
Under SOP 50 10 5(f), borrowers may be able to refinance their 504 loan if they meet certain criteria. Although still not as widely known to borrowers as one might expect, as of the January 1, 2014, refinancing has been possible, if: (i) the transaction is used to...
There's no way around it: divorce is stressful. During this often ugly process the soon to be ex-spouses battle it out and in the end arrive at a division of property and debt that they both agree upon. It is on the assumption that this hard-won agreement represents...
What is cancellation of debt income? We all understand that if I give someone ten dollars, that's income -- they received cold hard cash. It is a little harder to understand, but if you borrow money, you still receive cash, but it is not income. Why not? Because you...
According to the IFA’s Economic Impact Study prepared by PricewaterhouseCoopers, from 2001 to 2005 the growth rate of franchise businesses far outperformed other businesses in terms of economic output and job creation. From 2001 to 2005, franchise businesses grew by...
