A Simple Plan: Lawyers

Critical Questions You Should Inquire About SBA Loans

What’s the worst thing that could happen to someone if he or she defaults on SBA loan?

It is not advisable to default on SBA loans because of the severe consequences involved. Your house could end up being put up for foreclosure if it has equity. Your small company or business can be shut down and everything inside the premises sold to the highest bidder. They might also opt to subpoena you for information and might even be arrested if you don’t respond to the subpoena in time. Therefore, defaulting on SBA loan is not good for you considering the consequences mentioned above.

Does my settlement offer go through my lender or directly to the SBA?

This will depend on whether the lender has submitted the matter to the SBA. Whenever a person defaults on the SBA loan, the lender will continue handling your issue until they run out of options with regards to the loan recovery.

Once the creditor reaches that point, he has no option but to refer the matter to the SBA for further collection efforts. Usually, a letter is written by SBA to the Guarantors and borrower concerning the loan. This letter is a clear indication that the lender is no longer involved in the negotiations and you are free to deal with SBA directly. Let’s say you have defaulted your loan payment over a couple of months, and your collateral might not have been liquidated, you will, therefore, still need to deal with your lender for a while.

My Creditor has not gotten back to me with regards to my SBA settlement offer. Am I off the hook and does the SBA forgive loans?

No. Banks today have hectic schedules and have become a place that is full of clients and activities. There are too many documents, and not enough hours during the day to give attention to each file coming to their desks. Lenders might not be in a position to call you or respond to your emails because of the nature of work they are doing, but it should not be mistaken to mean that they have offered you SBA loan forgiveness.

My bank told me that since my loan is guaranteed by the SBA, it isn’t possible for them to settle. Is that true?

This is not accurate, but, it has been a growing concern that people ask nowadays and needs to be answered. The SBA has created a process, specific form like SBA form 770 and SBA form 1150 with the aim of settling the debt for less than the full balance. If your bank is always blaming the SBA when it comes to settling these loans, the chances are high that they have never lent the SBA and don’t know what the SBA offer in compromise entails or they just don’t want to pay up.