What can be done to workout a defaulted SBA guaranteed loan?
One must be knowledgeable and experienced to launch a meaningful defense and a powerful offense when working out a defaulted SBA guaranteed loan.
Friends,
If you are reading this post, you undoubtedly have an SBA guaranteed loan and are having problems with it.
Please read this post and many dozens of others related post in this blog, a few listed and linked below. You will learn a lot, as there is much misinformation being spread about which borrowers are relying upon. Sources for reliable information are almost non-existent. This may be the only available source.
Start here, then call us.
- Surprise! No negative credit issues from defaulted SBA guaranteed loans!
There are many more posts in this blog regarding SBA defaulted loan workouts, read them, learn what can be done, then call us.
- Phone: 413.584.2581
- Fax: 413.549.2968
- Email: info@secondwindconsultants.com
…call Norman,, at 413-584-2581. He will arrange a no-obligation tele-conference call for us to discuss your issues and I will suggest a possible action plan and the results you may anticipate.
No matter what you have heard, defaulted SBA guaranteed loans can be resolved favorably for the borrower.
Call, we can talk about it. Read on for more vital information.
An SBA guaranteed loan in default. What can be done?
There is this urban lore that we frequently hear that claims that SBA loans and the personal guaranties cannot be worked out, paid off short with a compromised conclusion and with forgiveness of the shortfall, the unpaid amount.It ain’t so.
It can be done. We do it for our clients every day.(see, Yes, the seemingly impossible is possible! SBA workouts can go very well indeed. Two recent examples.)
It is difficult, as with any workout negotiation, and one must have a clear understanding of the SBA’s rules and requirements, however it can be done successfully if the situation is handled correctly.
In fact the SBA (Small Business Administration) has its own Offer In Compromise forms, and will negotiate a settlement indirectly, through your corresponding banker, if the appropriate requirements are met.
That’s both good and bad as its both the bank and the SBA must be satisfied and each has its own rules and requirements. But in the end it’s the SBA that controls the results, although it’s the banks we talk with and that makes for some confusion as frequently the bank or its attorneys are not telling you the truth…at all, and have their own agenda. We hear stories about misinformation everyday!
The SBA does however have some clear requirements that while not absolutely required, must be understood to avoid wasting time and being frustrated.
1. The SBA most frequently requires that the breaching business no longer be operational when an offer is made. This is also an important part of the strategy and must be evaluated very carefully as to how this is handled in order to serve your own best interest. This is not cut and dry but subject to many important and valuable options. The business may continue if handled effectively.
2. All the business assets must be liquidated. This is another important part of a workout plan, which must also be handled appropriately and can be accomplished in your own best interests. Liquidation takes many forms.
3. A significant legal effort by the bank to recapture any potential cash must have been implemented before an offer will be contemplated. In other words the bank must ‘exhaust its legal remedies and all the collateral must have been liquidated before a negotiation for the shortfall can occur’. There is some flexibility here, and this is a very important area of great concern, as many homes act as collateral for the loans and yes they can and will be liquidated if this issue is not handled correctly.
4. All the guarantors, including spouses if he/she signed the guarantees must deal with this issue effectively and completely. If not a spouse, then each guarantor sinks or swims on their own merits, with each filing their own offer in Compromise. If the debt is guaranteed by both husband and wife, there are greater difficulties which must be worked out effectively, mainly the marital home.
Each guarantor other than husband and wife, must file his or her own offer in compromise and create their own negotiation settlement.
Frequently this also becomes a source for negotiation as we want to resolve all the issues in one global resolution for all parties involved. This can be a challenge.
Keeping in mind, that the bank actually lent you the money, in most situations the SBA merely guaranteed the payback up to 80%, but since the SBA will pay the bank, they require the bank, as its agent, to exercise all due diligence and to exhaust its legal remedies to collect as much as possible or the bank may potentially violate the terms of the guaranty and lose the payback guaranty. This is the source and reason for a tough bank collection practice and a no compromise attitude.
Your lending bankers support and cooperation is important in developing a successful workout, and without a good banker relationship a good workout conclusion is harder to achieve. A third party expert can play a very effective role in this situation.
The overall principles remain the same, maximum collection under the financial circumstances of the borrowers situation, clearly however this is subject to interpretation and effective presentation.
It takes time, approximately 6-8 months. The SBA is a political beast and over the years, depending on various political issues, they can be easier or harder to workout loan shortfalls.
At the moment I believe the SBA is suffering many losses thus they want to stem the flow of loss, but their mission is to support the small business owners, the borrowers, so the results are mostly depending upon the quality of the preparation and presentation, overall they are tough but we get what we need.
The SBA and the banks are very busy and reviews files in the order they are received. They typically ask for additional information, once under review, to better understand the financial condition of the guarantors and thus it can be an extremely long procedure, which can take many months, to conclude. The first offer is usually universally rejected, demanding a higher offer which many applicants provide. There are alternate strategies which work more effectively then simply raising the offer which we utilize to protect he borrower.
Once rejected, we have had success in modifying the offer further, the “second wave” negotiation we call it, adjusting the terms and conditions and even lowering the payoffs further than previously offered, based on the realities of the borrowers condition because of the long passage of time, more erosion of the borrowers financial condition can occur, and adjusting the terms of payback resulting in a lower offer as a response.
This second pass is very important and can yield extraordinary results.
We know were you are headed before anyone else, thus planning , preparation and effective documentation is critical for the best workout results for the borrower.
Definitely hire someone experienced and therefore knowledgeable regarding the practices of the SBA and such workout scenarios and it will all work out for the best for you. Do not experiment, do not do it yourself, do not listen to advice from the bank. Do not rely on lawyers and accountants who have nor done this many times and thus do not have a deep background of experience with this process.
Additionally, there are sometimes serious potential tax consequences regarding workouts and forgiveness of debt which can be quite devastating and must be considered throughout the workout negotiation, or one runs the risk of solving one problem while creating another almost as large. Remember debt forgiveness is converted to ordinary income for IRS purposes and ordinary income calculations. There are many exceptions available, there are strategies around this issue. One must simply know how to utilize them.
We would be delighted to review your situation and without obligation make recommendations.
Call Norm at 413-584-2581 he will arrange a no obligation tele-conference. We can discuss your specific circumstances and design an effective strategy that will yield the best results. We can implement the plan on your behalf if you choose, that’s your decision once you are more knowledgeable about what the possibilities may be.
I await your call.
Donald,
I would like to discuss my case with you…(312)622-1242.
Thanks!
Trevor
Trevor,
cease legal activity, your wasting time and money, fill out the offer to settle package and enter into a dialogue and negotiation directly with the SBA. Call me for details and strategy, I would be delighted to give you more insight and assistance.
Don
Don,
I would like to discuss my case with you. I opened a ice cream franchise and had a CIT loan that was SBA backed. The loan was to an LLC I created however, I signed a personal unconditional guarantee. The store is shut down after losing $5,000 a month for approx. 3 years. All my equipment has been sold by CIT. I made payments for the first year and half then we were trying to restructure the loan giving me time to sell the store. I’m now at the point of trying to settle. I’ve already lost alot and I’m not sure what amount CIT would accept.
Linda, I would be delighted to discuss thius with you, however I must ask you more about your personal financial condition.
The answer is in your presentation based on effective preparation and what your financial condition is. Please call me on my cell phone 413-687-8388 and we can discuss and determine an effective strategy.
don
Don,
I purchased a Pizza Franchise that went bad and I am completing the SBA offer in Compromise paperwork for Comerica. I would like to speak with about the best way to present our offer in hopes of getting it accepted. We only have about 10% cash compared to the amount owed. I trying to get wise advice before making the offer.If you could drop me an email I will call you aor give you my cell phone #
Don,
My family owned a travel business. They applied for an SBA loan – I was required to sign due to the fact that I was given ‘birthright shares’ (<0.2%) of the company. The company went under, the SBA loan went onto my credit (the company apparently was never officially ‘wound up’), and so I had my attorney contact the SBA point of contact and figure out a way to settle this. At this point we have done everything she has asked – provided documents, financials, met all of her deadlines, etc, etc. It seems that now we cannot get her to move on the settlement offer on her desk (the amount of which was suggested by her). Any ideas or experience as to how to get them to settle ?
Your bank representative, the actual lender is in control of the process , however even when the Offer in Settlement is submitted it will take the SBA a few months or longer to consider and respond. There is not much you can do about that so hold tight and wait it out.
DT
Mr. Todrin -
Thanks so much for your wisdom. I too am a franchise that is getting ready to close. (love those franchises!) I was planning on going to the bank myself to offer a settlement, but was advised to get a lawyer. Will that help me? My husband signed with me and guranteed it. (he has a good job) Will they want us to sell our house or delve into our personal stuff to let us settle. We also have a home equity which we probably can handle, but not both it and the SBA. Trying to stay free of bankruptcy. Please advise. Thanks!
Please call me, there is much I need to know before I can properly evaluate your situation and provide you with a viable strategy. I would not recommend you hire a lawyer now unless its a workout specialist with specific experience in this matter, and then I am not sure why you would need such support. Lets talk and i will walk you through the best strategy possible, 413-687-8388
Don
Mr. Todrin
You are a BEAM of light. I had a small real estate company that tanked….surprise surprise. I have two pending forclosure with an outstandind SBA loan for 100k that I cant pay back. What if any I can do. I hear so many possible things but i need some filtering of the smut….I need a lawyer but cant find the right one. Is bankruptcy my only option? Am I doomed?
Please advise!
718-807-1058
Donald,
I’d like to discuss with you details about options on a $350K SBA loan which payments are currently current, but the company will be discontinuing operations within days.
Please call: 323.273.1919 at your earliest opportunity.
After the bubble burst (T) and 911 hit (K), my media company was economically devasted. As well as everyother business in this industry. The war in Iraq was the “0″ in the TK0. Since my business (and home) are located in a contiguouus county to Arlington (Pentagon), My company qualified for a 911 disaster reilf loan. MY compnay never made, was dissovled, and I had to file personal bankruptcy. I have been unable to pay a dime on it. 500K. The SBA has been fairly ammenanble, and we are going through the O&C process. My house barely has the equity to pay the SBA (second lien holder).
What are the chance of them giving a complete foregiveness based on my personal financial condition, need to sell home, and find another dwelling for wife and 4 kids, etc…
I need a little more info but at this point it seems a though you should be able to escape with a small payment. Call me I would be happy to work this out with you and develope a viable strategie. 413-687-8388
Don Todrin
Could I contact you in regards to the SBA loan I currently have? It is for a small amount, and it is a candle business. We are still in operation, but we are trying to stop the bleeding, so we will have to shut down within the next couple of months.
I want to know what my options might be, and it the Offer in Compromise is something we should consider. My husband is an architect, and he has a good salary. So, any help would be appreciated.
I have been in contact with my loan officer and she is willing to rework the loan to whatever I can pay per month.
Of course, call me at 413-687=8388 and i would be glad to help you work out a strategy and a plan
don
Mr. Todrin,
Planet Smoothie Franchise in Arizona.
$235K invested.
$190K loan.
80% backed by SBA to M&I Bank.
Opened Jan 2006.
Divorce Nov 2006.
She ran business into ground.
I was a personal guarantor.
Dec 2006 sold our home. Bank sucked up a huge chunk for loan.
Jan 2007 sold business to John Doe on structured payments.
He defaulted, store permanently shut down.
M&I has taken over assets.
Current balance on original $190K loan is $67K.
M&I has all the equipment, etc., but probably we are talking $5-$15K. M&I is fully covered.
I make good money: $140K but ex-wiped me out and have little to no money or free cash flow.
What offer in compromise would likely be accepted?
Ex-wife is bankrupt.
I may call your number posted above if that’s okay I hope.
I need to ask you a few more questions and then I can propose a strategy and project a likely conclusion, call me on my cell phone 413-687-8388
don
Donald,
We have an SBA loan of $49K for our closed construction company in California. We are currently under 4 lawsuits from other vendors (auto, credit card, vendors). We are defending ourselves because of no money. But should a lawyer be used when dealing with SBA?
My approach does not require a lawyer. depending upon your net worth, income stream etc, if you are as upside down as I am guessing you are, you should be ale to negotiate a small settlement for a release from all your business debt. Same with SBA, as long as you are upside down,( negative net worth, liabilities are more then your assets) fill out the offer in settlement form and propose an affordable payoff, say $2500., to $5000. and then require payments over time to afford it and this could work fine, call me if you want to discuss your details i would be glad to discuss a strategy more specifically.
don 413-687-8388 cell
Don-
My husband took out to SBA loans for his restaurant which has since gone out of business. One for $60K and the other $40K. How do we obtain the offer in settlement forms and what are realistic amounts the SBA accepts?
You should get them from the loan oficer you got the loan from, if the collection process is in legal, you may get them from the lawyer who will get them from the lender. I can provide you with a copy however since the loan officer is your contact and is representing the SBA ad his opinion counts, it is best if you talk with him/her and discuss your desire toi go this path. the loan officer should be cooperative .
as for what you can expect, it depends upon your net worth and ability to service debt. thats the two benchmarks. call me and i wild be glad to help you with the forms and with an appropriate offer. 413-687-8388
Don, thank you for the information. As part of our defunct construction company we had leased a warehouse for 5 yrs @ appx $9k a month. We were luck that we were able to sub-lease and have positive cash of $300.00 a month. Does this effect our offer to SBA? And affect our out of business status?
Don,
I purchased a new finished shell retail center with SBA loan iao $1,835,571.00 included $139k for the coin laundry equipment(the equipment total is $450k), I had come up $170k at closing for the equipments. As a new finished shell retail building, it cost $200k for the coin laundry finish-out, deduct the incentive of $51k from the seller, there will be $150k of shortage. The contractor had done $27k worth of job then stop because I can no longer pay. I had put $24k downpayment with equipment company which they denied my order to the lender. I tried to get addition loan and get none. I am 3 payments behind, the lender sent me letter stated that I misused the sba fund and is committed a Fed. criminal case.
Do I need a lawyer for civil case or criminal defense.
Please advise. Thank you.
DON,We started a small furniture interior design business and received a sba loan which we personally guarenteed with our home.we recently closed the doors on the business,we don’t want to lose our home and we don’t want to stiff the bank.what can we do?we can’t afford to pay the monthly note.will the bank work with us?
Yes there is much which can be done, I need more information regarding your personal ballance sheet and income statement , equity etc…then we can determine the best strategy possible. Call me and we can discuss this further. I would be delighted to help.
Don 413-687-8388
I have a grocery store with real property, which is backed by SBA loans 75% gurantee. I am about to default on SBA loan. I have colleteral and property, which can be sold around $375 to $400K. I have loan amount $500K. If I want to negotiate with my lender to lower the principal amount so I can happily operate my business what should I do? Please let me know. I would appreciate your help. Thank you.
Donald
I found your web site using a Google search. I am in the midst of an ongoing problem with a local lender over an SBA loan that has gone into default.
I had a successful mortgage company for many years but the downturn in the economy- and our industry in particular- took the company with it.
Based on the criteria you laid out, we appear to meet the workout guidelines but the bank is adamant saying that “nothing can be done’
Please advise.
Thanks
Meir Horowitz
Mortgage Market Resources, Inc. (now defunct)
Believe very little the bank says, as they are negotiating against themselves in this situation so of course there answer is pay up…what would you expect, but the real bottom line is of course there is a workout available and you can successfully navigate this issue “with a little help from your friends”…me.
call me lets talk…we can work this out.
don 413-687-8388
Our family business took out a 900k SBA loan to complete(we expanded our current bowling center) a Family Entertainment Center and unless we find another investor within the couple of months we will be forced into bankruptcy. I own 33% of the business and had to sign all of the personal gaurantees when taking out the SBA loan. With that being said, I have a home with a mortgage of 132k, the house is worth 210k. I am trying to sell my home now(much below what it’s worth). Will I be able to sell it or does the SBA have a lien on it?
Hold up for a moment, there is much at stake and many options exist for you to consider with conclusions that are in your best interest that may not be obvious. Call me and with a little more information I will suggest a few strategies that will work for you…
don 413 687-8388
Hello Don,
I purchased a franchise and had a CIT loan (700,000) that was SBA backed. The loan was to an LLC that my partner and I created however, I signed a personal guarantee, with no collateral. The store is now shut down after being in business for less than 2 years. All my equipment has been sold by CIT (-30,000). CIT has sent over the offer to compromise, and the balance on the loan is still over 650,000. This company was my sole income, in which I’m now unemployed. I’ve exhausted all the money I have on living expenses. Is there any way they will forgive the total amount? And does the franchise normally forgive monies owed to them as well?
How do I find a SBA loan workout specialist to help me with a loan workout? Is that a common practice for lawyers? Finances specialists? Debt specialist? I would hope to find someone local, but I don’t know how to search for one.
While there must be others, based on the number of requests for such referrals that I receive daily, I may be the onl one out there!. Actually I have done many SBA workouts and believe that you do not requre a lawyer unless he/she is experienced in SBA workouts, its not a legal issue but is a specific workout with its own unique parameters.
I would be delighted to help you evaluate your situation and recommend a strategy and if you want some direct, hands on help I would also be delighted to provide same. I do this all the time.
don 413-687-8388
We have a SBA federal disaster loan from 1998..had no flood insurance…. have paid on time for the last 9 years … we are in our 70′s, had 2 more floods … .all this has taken our savings etc…. dealing with cancer, other disabilities for husband and myself… house is not worth what is owed on it with this extra loan.. need to move to ba nearer our children, we cannot maintain a home anymore … do we have any other recourse other than walking away or bankrupcy.. Have contacted congressman, aging council,and SBA, keep giving us numbers to call and write, so far nothing… any advice…
I received a $700,000 SBA loan at 8% in April, 2008. My customers (Costco, Sam’s Club and Kroger) will not start their contracts until September. The bank used ALL the money to pay my bills! I have struggled to pay my $11,000 per month loan. This month, I just don’t see a way to pay it. Any suggestions? I am in total hock to the bank (guarantees).
Oh yes I have definite opinions, and would be delighted to share appropriate strategies for you to get out of ths alive and whole….call me and I will get the additional info I need and will provide you with the startegy that will work best for you to resolve this issue favorably for you.
don 413-687-8388
Talked to you on the phone today!
THANK YOU SO MUCH FOR YOUR HELP!!!
p.s. I will definitely take your other advice too and re-kick my husband in the ass!
Many blessings to you.
Casey, thank you for your kind words, however I am not yet done as you open the subjet that is very important to us all.
what do we have of value and importance if not our word. What happened to integrity and true grit, keeping our word, doing what we say we will do and acting honorably.
“Nuff said, maybe too much. good luck and enjoy your new family on the way, having a baby is a gift ftom God and the greatest experience of all. God bess you and your family.
don
Hello, we owe 70k on an SBA loan, and 25k on a credit line with our bank. It was a guaranteed SBA loan for 150k, made in 2001. We have excellent payment history up until three months ago. Our industry has dissolved and we have 0 income/receivables. We meet with the bank for a workout tomorrow – do we offer in compromise or can they simply liquidate? All the equipment is old at this point, and worth very little. What are our rights? Thank you!
Both needs to happen, before you can make an offer to compromise you must first liquidate all the collateral. Work with the bank in doing this if you can and then make an offer in comrpromise, if you need help evaluating what you should offer give me a call 413-687-8388
don
Both needs to happen, before you can make an offer to compromise you must first liquidate all the collateral. Work with the bank in doing this if you can and then make an offer in comrpromise, if you need help evaluating what you should offer give me a call 413-687-8388
don
Both needs to happen, before you can make an offer to compromise you must first liquidate all the collateral. Work with the bank in doing this if you can and then make an offer in comrpromise, if you need help evaluating what you should offer give me a call 413-687-8388
don
Hi Don,
I found your blog on a google search. It has been very informatice about workouts with the SBA. My husband and I opened a franchise in 2007 with a $292,000 SBA loan. At the end of 2007 we closed the business, but tried to keep paying on our loan. We finally contacted our bank CIT small business lending in March of 2008. They have allowed us to liquidate all of our remaining assets from the business. CIT agreed were able to collect more for our assests than they could. We have paid down our loan to about $225000. We now have no idea what to offer for a workout amount since we are upside down with all of our current debt This debt does not include our monthly living expenses. Is it possible to offer the SBA a small percent of what is owed? Can you help us?
Yes i can help you, and the good news is you shold qualify for an afforable payoff given your financial circumstances, Call me and we can discuss a strategy and prepare your offer in settlement.
413-687-8388
don
Received my SBA OIC packet from CiT. After selling off my business assets I still owe $392k. I’m in debt up to my ears and now the only income I have is my military retirement since my wife will be losing her job at the end of this month.
CiT knows that the only asset I have left is our home and they have a 3rd on it for the entire loan amount. With the depressed real estate maket my home is probably ony worth arond $175-190k and the payoff on the 1st & 2nd is around $132k. My attorney advised that CiT would probably settle for the difference between the payoff of the 1st & 2nd and the value which would be somewhere around $40-55k but you can’t get blood out of a turnip.
Your attorney is on the right track, but from the facts mentioned I believe we could do much better, in fact I would project a very small affordable payoff, pennies on the dollar….it requires experience with these workouts to know what will work and what will not. Call me to discuss further 413-687-8388
Hi Don,
My husband and I are at the end of our rope with SBA, we took out an SBA loan after Hurrican Katrina in 05′. We have come across some bad times and can no longer seem to pay any of our bills. We have received, after 21/2 years of fighting with the Mississippi grant people our awards letter of receiving $27,000.00. We will not see any of this money SBA will get it all. After contacting SBA they are not willing to work with us for a dime of that money to pay arrearages, house note, 1st mortgage, taxes owed. If this is any consulation on helping people with their loans, belive me we will live under an overpass if this happens again! We are having to claim bankruptcy for other reasons, due to my back injury and can no longer work. Can you claim SBA for bankruptcy? Thanks in Advance for any answers you may have to share with us.
yes you can claim an SBA guaranteed loan on a bankruptcy…Sorry for your predicament, if you would like to consider an alternative approach call me, however it appears you may need to file for “other reasons” as stated.
413-687=8388
don
Hi Don,
My Wife and I took out an SBA loan loan for our pizza business and after about 2 years we found out our loan(from Huntington Bank) had been sold to another company called First City LLC or FH Partners. Can they do that legally?
Thank You, Rod (OH)
yes they can, at will. The same terms and conditions you agreed to follow the deal, but the servicer can change, or the owner can change…If you are having difficulty with the loan give me a call to discuss options.
413-687-8388
I will try to make a long story short.
4 years ago me a 7 family memebers decided to build some homes. I invested some money as did the others.
About a year and a half ago, we needed cash to keep things going, so the person in charge of the project decided to borrow some more money. 100,000 grand total.
I was asked to co-sign the loan. I was told this would not affect me personally. It was only a buisiness loan. Trusting my family , I signed the loan. For people out there never sign anything. NEVER.
SO here we are today, The housing market has gone to hell. All of the partners are fighting. No one is willing to pay for anything.
We are now 2 months past due on the loan I signed for. I also found out that it is a SBA backed loan from Chase.
That is the jist of the story. Now I am freaking out. I do not know what to do? Is there anything I can do protect myself from this loan? File Bankruptcy? Sue my family?
I am really scared and was hoping you could give me some advice on what to do. WHat is the worst they can do to me.
We do have 3 lots with equity left in them to pay it off, Can we get the bank to use them as collatoral? Instead of me personally?
Please any help would be great.
you can rach me at 847-293-6449
or just send a repy here.
It may not be as bad as you are thinking now, there is much we can do, lets review the details and I will propose a strategy that will work best for you. call my office and arrange for a teleconference with norm…we will talk soon.
don
Hi Don-
Last month, put in an settlement offer of $2500 for our $40K SBA Loan. I do not think our loan officer actually put it through to them since she said it was ridiculous and they weren’t going to accept it. In any case, however, we did in turn just recently receive a letter from a law office stating they would take whatever legal action is necessary now to protects its interest which may include foreclosure of its collateral. Please advise!
Thank you ,
Casey C.
I agree, it appears that they have not submitted the offer. I wonder did you make the offer within the Offer in Settlement packager provided by the SBA or was it just an offer. Further did your financial statement reflect the offer appropriately? If not you have more work to do.
Let me know exactly what you submitted and I will advise you appropriately.
Dear Don, I stumbled onto your website frantically looking for information about the SBA. My husband and I open a car wash 7 months ago that we built ourselves we purchased the land and the construction with an SBA Loan thru First Service Bank and the equipment was leased. Because of cost overruns about 5% this left us with NO working capital and the bank is not willing to give us any more money. We are seriously looking into the next 2 months with anxiety because our business dropped 50% in Sept and we do not have our monthly payment as of today and it was due. Our loans are backed with our homes and we feel we should just sell it because we do not know if the winter will help or not. The value of the property is high and should cover but if not will the houses be taken?
Terrified in PA. Thank you, Jill
Jill, Relax a little if you can, there is always a path through the fog.
I must talk with you further to determine an appropriate strategy.
Please do not even consider selling your house, there are far better ways of navigating this sitution even if dealing with massive losses without losing your home.
Call me, lets talk further, I need more detail and we need to discus options.
Don 413-687-8388
Any advise on how to handle Huntington National Bank whose employees admitted in federal court that they were out to defraud the SBA by closing up companies and selling the assets then tell the SBA that they collected nothing? I’m not kidding – this happened. Can I call you about this? I still work for this “new” company as they sold the other old company to several employees. Thanks
Cheryl
See a lawyer,,,unfortunately greed and wrong doing prevails far too often in our society and we are seeing the results every day.
Started a franchise using an LLC. Franchise failed, went out of business. Used SBA to get commercial loan. SBA required private residence as collateral in order to guarantee loan. Just received notice of foreclosure from bank. Have a 1st mortgage and 2nd mortgage on private residence. Am upside down. Can bank foreclose on my property, when business was an LLC? Thanks for your help!!!!
Yes Ivonne, they can, however there is no reason why they should if you hande this situation correctly… Call me I ned additional information, and i can helpyou resolve this issue without losing your home and on terms favorable to you.
413-687-8388
My business is failing and I can not pay my SBA loan. What can I do?
There is much that you can do and the results will be most beneficial to you. We must engineer an appropriate offer in comromise to reduce the obligation to an affordable amount. This is a simple statement that may require a significant effort to produce the desired results, but it can be done.
Call Norm at 413-549-2966 and he will book you with a teleconference with me so we can discuss it meaningfully.
don
Hello Don. In your most recent telephone message, you asked what we wanted to do but during our phone conversation before that you had said you were going to send us a proposal. I gave you my email, but perhaps you misplaced it. Please get in touch with me either via email or by phone at 507.894.4624. Thanks. Karen
Hi Don:
I took out a small SBA micro loan of $5000.00 in 2006 to help me with a start-up business out of my home. Needless to say, it failed miserably, I’m now on a fixed income (very small retirement) and the remainder of a workers compensation settlement I received after incurring a cervical spine injury at my regular job. I defaulted on the loan but was scared into starting payments again after speaking to the bank (Innovative Bank, Oakland, CA) who told me if I didn’t pay the loan the government would come after me. After making an immediate huge payment from my credit card (now almost maxed out) to bring the loan current, I’ve been struggling to pay the minimum monthly payment; but I don’t see how much longer I can do this as my savings is dwindling and I’m still without a job at this time (although I continue to look). When I took this loan, I had to pay the bank an upfront amount of $475.00 as well as open a business account. There were no assets; the business was based on a product I had created and the hope of bringing it to market. The balance is now down to approximately $3200.00 but it might as well be $32,000.00. I asked to settle the amount with the bank (I offered to pay $1500.00 to settle the debt) but they would not accept anything less than 75% of the balance, and even at that, they said a board of directors would have to approve. Is there anything I can do? Will the government take my retirement if I can’t pay? Thanks in advance for any advice you can give.
Theresa
Donald,
With the unprecedented amounts of money being spent on large business to bail them out. Will there be a relief program for small business and more importantly will it help with our SBA loans?
Thanks, Eric
I wonder the same thing and ask the same questions but for as long as the SBA demands that the lending banks excercise their full collection rights and liquidate all collateral in an attempt to recapture debt unpaid, the road will be a hard one for defaulting SBA loan holders, excepot to say that I have had terrific success navigating this mine field and have helped many SBA defaulting loan holders get themselves out of a life time of debt or total loss…So while we may not see any direct assistance in ths area call me and i can help you.
413-687-8388
Theresa,
It sounds to me as if the banker is not dealing with you fairly or squarely, It does not seem to me as if you submitted a legitimate offer in comromise ion their (SBA) forms and that it was seriously considered by the SBA, it sounds as though the Banker is just tryng to intimidate you and winning at that.
Insist on a workout package and make aqn offer of $500.00 and walk away. Call e if this does not work and we will fix it. No charge for my services. You have been beaten up enough.
Don 413-687-8388
Hi, I have a loan balance with banco popular backed by sba, balance of 285K, the business is making its current payments. what if it is not able to make the payments. I also, have other business, some with partners, some with only my name. If the payments on this loan are not made, can it cause problems for other business (all s Corp), but with current sba loans.
It is unlikely that one default in one enitity will reach the others…it is entirely possible but unlikely. This means if you eneter into a pro-active strategy which will repel such penetration surely nothing will happen to the other entities, left to its own its possible as there is a path from one to the others…unlikely but possible.
More importnt however is what is your strategy for the primary problem loan…sounds to me like a pre-emptive workout is apropriate. The question is will the business operate profitably without the 285 debt…if so call me we need to talk. 413-697-8388
Don,
Give yourself a hug for me. Your sight provided me some badly needed encouragement.
I owned mortgage brokearge in Arizona from 2001-2008. We bought a 5600 square foot building in 2006 and became unable to make the payments in Feb 2008. About $800k is owed on a 1st mortgage and about $600k on a SBA guarenteed 2nd.
There is a trustee sale scheduled for 11/10. I also have a party interested in buying the building for 1.2mil leaving a shortage of somewhere between $300 – 400k. The SBA has indicated that they are agressive and will chase after me for the shortage.
I earn less than my bills right now and my personal networth is down to about 80k in a 401k, about $200k in equity in my primary residence and some funds in educational IRA & Coverdale accounts for my children’s education.
I have no means to pay the SBA and would like them to accept a short sale. How should this be worked out?
Easy….. call me, I know you already have and I returned the call, we are missinf each oher…call my office, speak with Norm, he willarrange a telephone conference for us and i will explain what you can do and how I can help you.
Don
Norm 413 549 2966
Donald, Have a SBA construction loan (home based business). After 5+ years in business, still not self-staining. Cannot afford continued losses. Out of time an money. Have lost everything on this project, including my 401K. Business property which also includes residence is going to be sold at auction. Need funds to try to move. Planning to sell some fixtures, etc. prior to auction but concerned about possible legal ramifications. Not sure what is considered “collateral”. Please advise ASAP.
I only wish you would have discovered my blog earlier so I culd help you resolve this issue without auch massive losses, however maybe it is not too late. Call Norm my Client SERVICE MANAGER AND HE WILL ARRANGE A TELECONFERENCE, we can disuss any possibilities tht remain for resolution. In regards to yur specific question, Be reasonable and you will not run into problems, stripping the copper wire out of the electrical system, or selling the heating system is not reasonable. Will they follow you? Probably not, but try to do the right thing.Its the best policy.
Don
Hi Don, Thanks for the conference call. I too wish I would have found you earlier as well. Unfortunately, it was too late to do anything. Auction was today. No bidders so property has gone back to the bank. They will pay off the 1st and put it on the market for sale. I worked very hard for the last couple months advertising and trying to sell the property. Go no offers! Think the bank will be sitting on this for some time in today’s market. Is there any opportunity to negotiate now with the bank? Unless this would be advantageous for me, I’m resigned to cutting my losses. Curious.
Yes, there is, you can now go to the bank and buy it back…for whatever you choose to offer as clearly the point made at the auction is there were no bidders….be the only buyer, your offer will be good. Buy for less then was owed. Call me I will help you find a mortgage and determine a strategy to succeed.
413-549-2966.
Don,
Could you please show examples of compromises that you have negotiated showing the balance owed on loan before negotiations and amount owed after negotiation with SBA?
Thanks
Of course, a few current deals that come to mind:
1. an elevator company over 1.1 million in debt
setteld for $280,000.
2. A hotel in the midwest. 1.8 million in debt
settled for $800,000.
3. a machine shop in Massachusetts,
approximately $600,000 settled for $4500.
Call me to discuss your situation as there are many factors which blend together to determine the outcome.
don
Dear Sir,
We have an SBA 504 loan, the primary lender did not deal in good faith. We were misinformed during the construction of our $ 2.5 million dollar project. Our lender disallowed over $ 400k in equipment, furniture and fixtures. They offered alternative finance options at 14% we have paid the price over the past four years this has cost us $ 8200 more a month in debt svc than if we would have included all initial project costs into the sba504. I desperately need to have the SBA allow us to go back and subordinate to a new lender at a higher 1st mortgage to consolidate some of this debt. I can no longer handle this debt svc.
My attorney thinks we have a case against primary lender… We don’t have the time nor money to address this
We need help now
the CDC tells us that we cannot go back and that the agree we got screwed but the sbadoes not allow for refinance of existing debt.
I would like to give you more if you think you can help
Tim Stevenson
Yes Tim, it sounds as though you got hammered…not unusual, the banks are not interested in anything other then how much they can profit,however this you now know.
Simply stated, if your ready to take the gloves of and fight for not just survival but re-emergence healthy and financially solid, lets talk, I have the plan…but need more info.
call Norm qt 413-549-2966 and he will set up an appointment for a teleconference where we can explore some options. Thanks for writing.
Don
Hello:
Three years ago, I started a business offering after-school Spanish-language classes to elementary-age students. After some initial success, the businesss stalled and I have ceased operations. I learned the hard way that operating a small business while working full time and taking care of two children is not possible for me! Anyway, my SBA loan was for $10,000, and I currently owe $7,000. My husband was laid off three months ago, my job was cut from 12 months to 10, and we have $80,000 less income this year as a result. Can you help?!
Pat
Yes, of course, Here is what you need to do. Call your banker and ask for the Offer in Compromise forms…fill them out and offer $1000. payable at the rate of 100.per month for ten months. It will take approx. 6-8 months for them to respond. Call me when the do and I will guide you through the process.
Don
Mr. Todrin,
I built a gas station with restaurant and carwash about 2.5 years ago. Wrong concept, price of fuel and the economy made it imposible for me to make it work. I run out of money while trying to make this work. I have been in default for about 1 year. I owe money to relatives and have credit card debt as well.
Project cost $2.825 Million. My injection into the project was 20% and SBA is backing 30%. I have a buyer that is willing to short sale and is willing to pay around $1.5 Million. Should I hire an attorney to start negotiations with the bank and the SBA. I guess if I can work out a short sale the bank will not loose any money, but I will owe the 30% to the SBA. I have a personal guarantee. My house is upside down and I do not have other assets except for my car. I am afraid I will have to short sale on my house as well, but I do not want to declare bancruptcy. How do I negotiate this? any advise will be greatly appreciated.
Gio
Mr. Todrin, my husband took out an SBA loan for $103,500 in Jan. 2008 (this year) to open a restaurant. We had to sign a mortgage on our primary residence even though SBA guaranteed it 80%. My husband fell behind on payments for various reasons including build-out took 2 months longer than it was supposed to, and the bank (RBC Centura) has now sent the loan to an attorney who sent us a letter of intent to foreclose/accelerate. My husband can now bring the loan current and pay the payments, the business is not closed. He told the attorney that he could catch it up to current and make the payments now, however yesterday the attorney (who originally said he was certain the bank would allow us to do that, that my husband was one of the very few to actually call him and say this), now emailed my husband saying the bank refuses to accept the payments and they are proceeding. Our home is upside down, SBA is in 3rd position, and if they try to liquidate the equipment they’re just going to close the business!
Can we be helped, we don’t want to lose our home or have them close the business- we’re just shocked the bank told their own attorney NO, that they wouldn’t allow my husband to catch the loan up and make the payments now (my husband is 4 months behind, and has spent 3 weeks trying to get ahold of the bank’s attorney and get an answer-he was 3 months behind when it was sent to the attorney)
Amanda
Oh, and I forgot to mention that both the Vice Pres. of the bank and his assistant that my husband got the loan from, no longer work at the bank. We don’t know anyone else at that bank to even call, every time my husband called the bank about the loan he was put through to a different person.
Don,
I have a personal SBA disaster loan from a flood 5/2007. Paid on time since but a financial hardship is hitting as we speak. Payments are still current but am wondering if SBA will forgive or reduce loan amounts?
Yes we can help you resolve this issue, however I will need more information, please call Norm at 413-549-2966 and he will arrange a no obligation teleconference for us to discuss your options.
DON
Dear Mr. Todrin:
I have a $480,000 SBA 7A guaranteed loan that will begin amortizing in January 2008. Funds were used to partial finance the start-up of quick service restaurant franchise. Although we only have a few months of operating history it is clear that the cash flow being generated by the business will be insufficient to service the debt. One of the only ways I see for this situation to work would to for me to pay down the loan to approximately $300,000 and rewrite the loan over the original term (10 years). In your experience would the bank be consider a restructure of this nature so early in the process. Thank you for advice.
Correction to previous post. The loan will begin amortizing in January of 2009. Thank you.
Mr Todrin,
First of all, it is great that you are helping people like me and it isgreatly appreciated. I am being forced to close a smoothie shop after 20 months and $63,000 in losses. I am upside down in the house on a first and second. SBA is in third position with $139,000 balance of a $150,000 loan. they will probably get around $10,000 when they liquidate the equipment. What can I expect on a Offer In Compromise?
Hi Don:
I took out SBA guaranteed loan of $80,000 for a liquidation business three years ago. I’m behind in my payments as retail sales is terribly bad. I need to close down the business to avoid further losses.
Any advice?
Twum
It is my pleasure to offer whatever help I can as there are few sources for quality information,regarding workout policies for the SBA defaulted loans.
In your case, there should be no barriers for you to achieve a sharply reduced compromised payoff and you should request it to be paid back over time. Call me if you need some help woth the form as the forms control the process and must be filled out effectively.
Twum, Yes there is much that can be done for you and I urge you to call my office and ask Norm to arrange a no obligation teleconference call with me so I can get a little more information and recommend a best case strategy.
413-549-2966
sba disater loan 40k cant pay back what can be done.
Mr. Todrin:
I have had a Tech Business for 13 years that started slowly declining about 2 years ago. I have a balance of an SBA Loan of 50,000.00 paid it down from 100K. Now I get a Statement from Advanta on Friday, showing that my Credit Card Interest Rate has gone from 9% to 34.9% and the balance is 25,000.00 I thought this had to be a mistake as I have never been late or missed a payment on anything ever, personally or business wise. I called and they told me that they did a review of the usage of my credit and because of high usage they were uping my rate. I never received anything to cancel the card and stick at the old rate but they say they sent something in October and say it is too late to do anything now. I have let go of all of my employees and make enough to survive but the business debt has now become a problem because of what Advanta has done to me. I have 75,000.00 in business debt and won’t be able to pay it much longer. I don’t even know if the SBA would refinance it and stretch it out longer, my credit score has gone from a 830 to 667 in 2 months. It appears I have been singled out and set up to fail at this point. What are the best options as I don’t have the funds to pay it off and not enough proof of income to get a consilidation loan?
I’m in a different situation, my offer in compromise was approved. But a debt collector has started contacting me! They are trying to collect 130% of the loan including fees. I thought the offer and compromise would release all my obligations to the debt? What can I do now? HELP!!!
Hi, I own car washes in Colorado, three went into receivership this past week (I am happy about it), one other is being sold shortly, and the SBA is delaying the final sale. It’s been about five months since making a mortgage payment, I’ve covered all continued losses, and it seems the SBA never makes a step forward although the contact keeps saying she will speak to the next decision maker in California. The “first” bank wants to work with us. My wife is close to a divorce over these car washes and finances. I’d like to settle with the SBA in a short-sale to a guy that can immediately close. It may be helpful to know the receivership forces me to likely close fourth plus the fifth SBA’s site this coming week or two as my employees are cost-averaged over five sites.
When may we speak?
Ric
I just stopped by your blog and thought I would say hello. I like your site design. Looking forward to reading more down the road.
Hello Don,
Great info here that is helping lots of people…Kudos. I am hoping with your obvious experience and contacts you’ve created you could help me. We are auctioneers that would like to begin getting bank business. Do you know of a source where I could find phone numbers and/or email contacts to reach the proper bank departments to get this type of business? I’d appreciate it.
PS- As a business owner, I respect all of the hard work that people go through to run their operations and don’t wish to be percieved as an ‘ambulance chaser’ but rather as a firm that does all they can to help their sellers and buyers connect fairly. We have conducted over 1250 auctions since 1991.
Don,
We came across your name after searching on the internet. We are desperate for help! We own an ice cream store/cinnamon rolls dual franshise. We have been losing money for over 3 years now. We are out of personal finances we are willing to put into this failing business. We have an SBA loan and stopped making payments 9/08. We have met with the bank and informed them of our inability to pay. The bank offered us a ‘deal’ where we extend our loan and lower our payments. We told them this was still not going to change the bottom line. The store has been for sale, but with our numbers, who will buy? Can you help us? I can be reached at 832-276-3366. (Nidal)
Don,
We have two equal partners signed as co-guarantors in an LLC. Original sba loan was $700,000. We paid it down to $350,000 and the business filed for bankruptcy. The bank (CIT) has been going after receivables for the last 8 months and may get another $100-150K. The trustee has not settled the case yet but is close. Do we wait for the business bankruptcy or what is our next step? We would like debt reduction and a payment plan?
J.B.
My LLC has an SBA loan and line of credit with the same bank. The LLC is the borrower but I personally guaranteed the line of credit and used my house as collateral for the SBA loan. If I negotiate a settlement is the amount of debt that is forgiven taxable to me personally?
Hi Don,
Would like to know if the SBA would work with us to reduce the principal on our restaurant loan without going into default. Original loan amount was $477k – 10 year term (Dec.’05). Current balance is $383k. All payments have been made on time. All three owners have signed personal guarantees and two of the three owners’ homes serve as collateral (although both homes now have only a small amount of equity with first mortgages on both). We have just requested that SBA remove the liens on the homes as the loan is seasoned and we’d like to refinance the homes at lower interest rates. The assets of the restaurant are also collateralized, as are the assets of our other restaurant (same ownership). The other restaurant has no debt and is extremely profitable. Currently, the other restaurant is providing ongoing financing at the rate of $3k/month which will probably increase as gross revenue is not showing signs of stabilization. Are we too strong for the SBA to consider renegotiation?
Thanks
Don,
I purchased a building using the sba 504 loan with a partner. The building is listed as the collateral but we did sign a unconditional guarantee. We are current at this time but are concerned about whats going on with the economy. The building is worth less now than we paid by at least a couple of hundred grand. If we default, what assets can they take and how long does the process take, we own a home and a couple of cars, furniture, IRA etc. ?
Hi Don:
I wrote a comment to you here back in October and told you about a micro-loan I took out with Innovative Bank in Oakland, CA using SBA. Here are the highlights:
[...I took out a small SBA micro loan of $5000.00 in 2006 to help me with a start-up business out of my home...I’m now on a fixed income...I defaulted on the loan but was scared into starting payments again after speaking to the bank who told me if I didn’t pay the loan the government would come after me...I asked to settle the amount with the bank (I offered to pay $1500.00 to settle the debt) but they would not accept anything less than 75% of the balance, and even at that, they said a board of directors would have to approve. Is there anything I can do? Will the government take my retirement if I can’t pay? Thanks in advance for any advice you can give.]
Here is your response to my initial query:
[Theresa,
It sounds to me as if the banker is not dealing with you fairly or squarely, It does not seem to me as if you submitted a legitimate offer in comromise ion their (SBA) forms and that it was seriously considered by the SBA, it sounds as though the Banker is just tryng to intimidate you and winning at that.
Insist on a workout package and make aqn offer of $500.00 and walk away. Call e if this does not work and we will fix it. No charge for my services. You have been beaten up enough.
Don 413-687-8388]
I did talk to you on the phone and went ahead and did as you suggested. I requested the Offer in Compromise from the bank in October and finally received it several weeks later (only after some cat-and-mouse games with the bank and after telling the bank that I had spoken with an SBA representative in their district who said I should call him back if the bank did not oblige me, etc.) and offered to settle the account for $750.00. I just received this email from Rosemary Williams-Snell (it’s taken them this long to finally respond), the vice president of Innovative Bank:
Dear Ms. Nixon,
This email is in response to your settlement offer of $750 to pay the above referenced obligation in full. Innovative Bank declines to settle the obligation for the sum you have offered. The total amount due through today, February 4, 2009, is $3,468.06. Our counter offer is 75% of that figure or $2,601.04.
The other alternative would be to continue making monthly payments until such time as you are able to bring the loan current. At present, the loan is due as of November 1, 2008 for a total of $297.42 and monthly
payments are $83.32. The $750 you offered divided by your monthly payments would pay the loan for a nine month period beginning from February. If above alternative is doable, your loan would run 60 days past due and would avoid the risk of being reported to the Small Business Administration due to a past due status of more than 90 days. Making monthly payments over a nine-month period would allow you time to continue your job search. Please let me know how you would like to proceed.
Very truly yours,
Rosemary Williams-Snell
Vice President
Payment Management Dept.
This is what I responded to her:
Dear Ms. Williams-Snell:
Thank you for your email; however, I cannot pay anything at this time. The settlement offer of $750.00 was contingent on a relative of mine offering the money to me only if it could be settled at that amount. Your asking for 75% of the amount is tantamount to asking for one million; the result is the same, I have nothing to give.
I can barely pay my rent and buy food; I live on a fixed income of less than $400.00 per month (my retirement); my savings is now depleted; I don’t know where March’s rent is going to come from; there is no work out there for someone my age. I guess the only alternative now is simply to let the loan go to collection.
Sincerely,
Theresa Nixon
Don, I have already had to voluntarily have my car repossessed; make arrangements with Capital One to be placed in their hardship program (which gives me a reprieve of three months before resuming payments I probably won’t be able to make anyway); and have absolutely no clue how I’m going to eat and pay my rent for the foreseeable future let alone make payments to these heartless cruds! Should I contact SBA myself? From her email to me, it sounds like she never presented my Compromise to SBA at all, only to the bank’s Board. Do you think you can help? I’m drowning in debt and just can’t pay.
God bless you!
Theresa Nixon
Hi Don:
I did as you suggested; unfortunately, the SBA rep told me it was the bank’s option to decline, and if they did, there was nothing the SBA could do about it, it was up to the bank. The woman at the bank called me and told me they would now notify SBA about my defaulting and SBA would institute liquidation proceedings against me, at the same time the bank will begin its collections against me. She kept telling me it was, after all, taxpayers money that funded my loan (never mind that I, too, am a taxpayer). It’s just a frightful shame that these banks are forgiven their dastardly and crooked deeds by our government, yet they come after the taxpayers who are bailing them out when said taxpayers have fallen on such hard times (most of which has been created by them). Each one of my creditors said that my story is the same as millions of others’ they hear everyday — many, many people are down on their luck and can’t pay. It’s not because we don’t want to; it’s because we simply can’t. So I say, let ‘em come on; there’s no pickings left. Let ‘em have at it! I’m done!
Hi Don, I’ve been reading all the posts on your site and amazed at how many folks, like me, don’t know where to turn. My 1 1/2 year old business is in trouble. Although I have not yet defaulted on my SBA loan it is eminent. My sales have stalled to a crawl since mid-September and I have almost eliminated all working capital. I simply don’t know what to do. Like everyone else, I guaranteed my SBA with my home. At the time there was plenty of equity to cover the loan, now there is not. I am out of money and most likely out of time. HELP!
The SBA rep (Fresno district) told me there was nothing they or I could do as it was the bank’s decision to decline, which he said was their option. What good would sending a letter to the SBA do then? I’m not trying to be argumentative; believe me, I’ll do it if you think it won’t be wasting my time.
Thanks!
I have a SBA disaster loan and I lost my job and I am two months behind in my payments. How can I work with the govt to resolve this issue?
I have a very different point of view and disagree with your approach for many of the reasons you site, however the real problem here is your mortgage free home, thats a problem, however there is a different view to be considered. You should call my office and Norm will arrange a tele-conference for us to discuss your options. 413-549-2966
Like many of these listings, I too purchased a franchise with a partner that will be shut down in the next couple of weeks. We too have an SBA backed loan for 221,000 plus many other debts as well. My question is: Is it possible to negotiate a separate deal with the SBA from my partner for my 50% of the debt so I’m not liable for all the debt if she decided to bail. She has basically been a deadbeat partner in our LLC for over a year now. We’ve only been in business since July of 2007. I am upside down in my morgage. I need some sound advise on how to get through this as painless as possible.
Thanks
I have a 504 loan on an industrial building. Because of a bad business setback five years ago I got behind on my 1st lien note but have remained current on my SBA portion.
The bank sold my note in the secondary market in Sept 2006 to a investment entity that now, I believe, holds many hundreds of troubled loans. The new mortgage-holder tried to claim default interest on the whole principal having never given notice of acceleration or default. While there is a waiver of such notice in the loan documents, my lawyer believes it is not valid and that Texas law requires written notice.
I am trying to workout this loan with the lender. They have contacted SBA about foreclosure. Here are my questions:
1) Can the bank sell a 504 1st lien loan to a non-sba approved entity? Aren’t there requirements the lender be under some regulatory authority and other requirements?
2) Does not the 504 1st lien holder have certain servicing requirements and at least requirements to provide written default and acceleration notice to the borrower? The servicing of this loan has been non-existent. Are there regulations you could point me to?
Thanks.
I was reading the posting with great interest. I like many others have an SBA loan. My loan was for 400K. Its been paid down to 348K, the business I bought took a nose dive with the economy. At each phase I contacted the bank to tell them that I wanted to sell off the segment that was failing. I had buyers, the bank took months to respond by then the buyer had gone. So were my chances of recovery.
I closed my doors in Oct. 0f 08. Still paying the loan until my accountant and I can get a response from the bank. We have offered them a work out of a term of 20 years and cutting the payments from 4813 down to 2800 a month, its been over a month with no response. Feb is the 1stmonth that I am short. I will make it up next month.
What is our next step. Time is short.
-K.
I am in the process of selling a house in which is collateral (one of two houses) for an SBA loan from Katrina. I want to help my daughter get a new house with the one I am selling. SBA says I have to use all the proceeds from the sale to pay SBA. Is there any way around this? I am still going to have the loan and I will still have my main house for collateral. My daughter has to move out and now short for down payment because of this.
Thanks,
Robert
Hi,
My husband and I got an sba loan for about $525,000 in 2007 for the build out of a fast foof franchise in a new mall in Florida. We opened in April of 2007 to crushingly low sales as the economy of southwest Florida tanked. By January of 2008 we had to close and allow the bank to sell off the equipment (the franchise took it back and took the equipment and presumably made a deal with the sba and bank for the purchase.) We have had no notice since of what the sale of equipment brought or any contact with the bank (even though early in the process we got a letter from an attorney asking us if we wanted this info and we said yes we did.) We have not made a payment since I think November of 2007 and clearly cannot, as we lost everything also. What is going to happen and when?
I was told by three different attorneys that the only solution is bankruptcy as we don’t even know what portion of the loan at this point is considered secured and we can’t ever pay this back anyway and we don’t have much left in the way of assets. Currently they have all our information but they have not contacted us in almost a year.
How long do they have to pursue us?
Don,
I’m giving this a shot even though I’m not really sure you can help me at this point. After Katrina I lost my job and ended up in another state with no help from Fema or anything else so I got an sba disaster loan. I got behind on my payments without realizing it and to make a long story short I am now in default. I don’t know what kind of collection measures they take but they don’t allow me to pay anything unless I can pay everything that is delinquent which I can’t…I finally got a letter from collections for the entire payment including an extra *1600.00 from late fees that I can’t pay in lump sum…Is there anything that I can do? SBA hasn’t been able to help me since I originally fell behind.
Sincerly,
Candy
My loan was directly from the SBA. Can I negotiate directly with them?
us there a chance at all of mitigating the amount presently owed?
Don,
I was very impressed to read your blog. I have 3 SBA one for 73k, 87k and 98k. All were going well until downturn. 3 months almost 4 in default now and although business is getting back, bank is needing money. I agree. Does SBA offer deferrments for a couple months until get back on feet? Or am I doomed to lose my business? Given time I think I can get it back on track but time is not friendly right now. Can you help me please?
Thank you. I will ask today. Then if they say no what options do I have and what can I tell them?
Ok, I am guessing I am going to get a no and yes, I will probably still be underwater by then. I would love to give you more information about my situation and see if anything can be done. Let me know how. Thank you.
Regrettable I started a business with a friend. With the recent economy and some bad business decisions the company has gone out of Business. We got a $100,000 SBA loan to start the business and have paid it down to $80,000. We both put up our houses as collateral and have been trying to work with the bank to make an offer in compromise. They have rejected my latest two offers and are turning the loan back to SBA. My old business partner has no collateral in his house and is not making any attempt to help settle the debt. I can pay my half but not his but I know legally I am responsible for all of it, as is he. He is going to declare bankruptcy and I am afraid SBA will not even pursue him and foreclose on me because my house has collateral.
То что бредомысли это точно
Видно настиг творческий кризис. Мысле нет о чем писать
Hello, I ran across your site and heres my story/question:
My husband is co-owner of a small business in a small town. A tornado came through and did some pretty substantial damage to the entire town in 2007. We took out an SBA loan and have been good so far until now, given the economic circumstances. Question is- is there anything that the SBA can do for us to lower (or eliminate- too euphoric) our monthly payment??
Thanks! Dora
Hi,
My father in law passed in June of 2005 leaving behind a big mess. He stopped filling out tax returns in 1996. He had over $1 million in the stock market(alot of that was on margin) which was unbeknown to us. We think that was the start of his Alzheimer’s disease. At the time of his death, he owed the IRS over $100,000 for not paying taxes in 1996 alone. When the market crashed he lost almost all his money. After his death, we were hit by Hurricane Katrina and lost everything in his place(no insurance) as well as everything we owned. We hired an attorney almost 4 years ago which to help with the mess but as of today, we don’t know what is going on with the estate. We sold what was left of his condo for $29,000 but everything else was lost in the flood. His estate does have some oil revenues(just the rights not the land) coming in to the lawyer which should be well over $30,000 by now. His stocks after margin are probably worth around $50,000 and he had a few credit card bills as well as hospital and dr bills left unpaid. The lawyer is a high paid lawyer from New Orleans and he hasn’t given us much hope of having any money left after the IRS is paid. My question to you is does the IRS work with parties to lower the penalties and interest on these old tax burdens? How long does this take and shouldn’t we have heard something by now? We do not get updates from this lawyer and I am wondering if he is even doing anything! IS there any avenue for us? I appreciate any help you may give, Thank you, Debbie Major
Debbie, you are entitled to an accounting and knowing exactly what he is doing and were the process is. Tell him you are unsatisfied, want a complete accounting and if he refuses telll him you will report him to the board of bar overseers. But first ask him for the accounting, only if he does not give it to you then threaten him with reporting him..Its taking way too long and interest abd penalties have been building every year. He should have filed and paid long ago. He may be costing you a small fortune in waiting…get to the bottom of it.
see comment. However the answer is you are entitled to a direct accounting and report on where you stand, The time delay is too long and you are entitled to know what he is charging and for what and what is happening.Demand same.If it does not come quickly and completely tell him you will complain to the board of bar overseers, the board that controls lawyers. that should get some action.
Don, submitted the Offer to Compromise as directed. Things have gone sideways now. the bank has sent Demand of Payment letters. Seeking payment by Aug 3rd. Almost as if they have ignored the Offer. I have asked for a meeting to resolve the matter. What is the next move?
They probably rejected the offer and need to be worked harder…can’t really tell without being involved and more informed.But clearly yoiu need some effective intervention and representation, call Norm at my office 413-584-2581 and he will arrange a no obligation teleconference. Don
A business broker sold me a flooring business in Ga. that turned out to be my ruin. The lawyer he introduced to me stole 10k from me the state bar is now investigating. The bank he got the loan through the FDIC says that there was not enough cash flow to justify this loan yet the bank is allowed to take my properties as collateral. How can this be legal?
It is legal until someone sues for damages. You signed the agreement so hey have the right to do what they are doing, if thee is wrong doing it must be uncovered and redressed.
If a SBA loan is given against there SBA or there own loan criteria can the bank be libel for that?
The bank is refusing to hand over the file. They say it is privileged info. I am not aware of any doctor & patient, lawyer & client relationship with a bank loan. Are they hiding something or is this just lazyness on the part of the banks lawyer here in NY?
You need to reconsider your approach. This will never work irrespective of what transgressions you believe the bank committed. Try another route.
My business is really slow right now. I am 4 months behind on a Capital 1 SBA guaranteed loan for 75K, 1100/mo. This is the only loan/credit card that I have fallen behind on (past 30 days). When I first knew I wouldn’t be able to make my payment on time I called them to see if they could defer a couple of payments. They said they wouldn’t defer any payments since it was an SBA backed loan. Now I’m four months behind. I see one of your other responses stated that they can defer up to six months of payments. If they would do this I think I could get the business back on the right track to repay all my debtors. Is there another way to ask them for deferment?
A deferment is totally up to the bank, they have the authority to grant you one, ask again.We cannot force it, but they should give it.
My wife & I closed our business Apr ’09. We had put 300,000.00 into it. We took a 250,000.00 SBA loan from our bank. They secured 200,000.00 of it with our equipment the remaining 50K was a lein against our home. At the time of closing we still owed 98k. The bank resisted when we wanted to shut the doors as we were in negotiations to sell it. We explained with the first quarters financials we could see it had become a lemon and it would be unethical to sell it. The bank stated there were many unemployed people looking to buy a job. We feel they wanted us to pawn it off on someone just so they could get a portion of the money we owed. When we informed them the landlord expected to be paid first or he would not approve the sale
the bank changed tactics. Now it was ok to shut the doors but the equipment was theirs. They were going to auction it off – proceeds going to the outstanding SBA. They had closed our bank account and taken what was in it.
They asked for a letter relinquishing the equipment to them so they could auction it off. We were furious to find they had sold it for 20k to the buyer we had found and been negotiating with. (it was a franchise – the franchise co. was only too happy to help as they charged the new owner the current franchise fee of 35k) Well the 20k is all we got towards the SBA so now we owe 78K. The interest paid on this loan over the 7 yrs was 91,726.00. We are trying a offer in compromise – we owe 123,000.00 in vendor debt, 191,000.00 in mortage, personal debt of 16,000.00 (our house is worth 260,000.00 per tax value)The bank played hard ball but finally submitted an offer but say the SBA wants my retirement acct balance. What gives? We are so broke because of this business venture. How can they go after the retirement $ – which I haven’t been able to contribute to in 5 yrs.
Darin,
They cannot go after it, it is protected, do not give it up…it is not the SBA that is driving this deal but is the banker…Insis on making an Offer in Compromise. I cannot recommend what it should be without a through evaluation of your financial condition.
We have a business, and we have been unable to pay the mortgage for almost a year now. The lender called us and asked if we can agree to a short sale. We asked if any deficiency will be forgiven, and the lender replied that it cannot simply approve a forgiveness of the deficiency balance of the loan or release the guarantors without the SBA’s permission. To the SBA, the sale of the property and the release of the guarantors are two separate transactions. They will want to see that we cooperated fully with the sale of the gas station before approving the releases. Is this the SBA or Lender’s call to forgive any deficiency?
Yes this is correct. Upon completion of the liquidation of the assets, you can then apply for forgiveness.
I have a $300k SBA loan that is currently default. I was behind in rent ($2kish, monthly rent was $8k, however, I had been slow to pay because of cash flow “issues” brought about by the bad economy). I had been working with a local SBA Development Center advisor to try to “shore up” my sinking business. We had a very well thought out one year plan that required concessions from my lender, landlord and franchisor. My franchisor refused to back me, and began it’s own negotiations with my landlord to evict me and they would take over the business (I was unaware of the franchisor/landlord relationship). I was evicted 12 months after I opened and spent $500k on tenant improvements and equipment (all spec’d by the franchisor). Here’s the REAL rub: the facility went operational 2 months after my eviction, my former business partner is owner/operator. The bank has filed foreclosure (set for May 28, 2011), I cannot find a job and have no avenues available to pay the debt. The bank will not disclose what (if anything) they received for asset liquidation from the new owner. In other words, the new owner and franchisor are operating a business that I used every single penny I had to finance the build out, etc. My franc hose attorney told me it is not illegal to be immoral and unethical. Do I have ANY recourse? Or will I become a statistic of poverty and homelessness at the end of May.
we could do a workout and remove most of the debt, or you could file a bankruptcy and get rid of it all. your choice.
Excellent website. Lots of helpful info here. I’m sending it to a few buddies ans also sharing in delicious. And of course, thank you for your effort!
Yes much can be done however i need more information to determine what would work for you.Please call Norm at my office 413-549-2966 and he will arrange a no obligation teleconference for us t discuss your details, thanks for the inquiry.
Don
Please call me at 413-549-2966, we can help you. Call Norm, he wil arrange a no obligation tele-conusltation, we can discuss options.
Not to worry, send the collector the acceptance letter and this should disperse him. If not let me know.
Lots can be done to benefit your position, please call Norm at 413-549-2966 he will arrange a teleconference for us to discuss.
Please call my office, Norm will arrange a teleconference for us to discuss your options. there is much that can be done to improve your situation.414-549-2966
yes probably, however I need additional information to be certain, call me 413-549-2966 Norm will arrange a tele-conference.
Wow, they are persistent in denying you your rights. Write them and tell them that you ae entitled to a hearing on your offer in compromise with the SBA and they continue to deny you this opportunity. Remind them you paid for the guaranty when you closed and insist on the offer beng sent to thr SBA as it is supposed to be done.
I woud then call the SBA and complain, and request that you be allowed to send it directly to them, copy the bank on your corresponsdence to the SBA. Follow up every conversation with a written letter. good luck.
You cannot give up, that is their strategy, send your offer in compromise directly to the SBA with a letter of complaint outlining what has happened.
You need to do a workout as soon as possible. Call Norm at 413-549-2966 and he will arrange a no obligaiton tele-conference.
Call me, I need more information, and we must create a strategy that works…413-549-2966. Norm will set up a no-obligation tele-conference
an offer in compromise….call for details.Norm will create a tele-conference for us to discuss.
413-549-2966
No you can’t do that but there are many things we can do to get you the relief and results you need, incldsing the ‘other’debt…call Norm at my office 413-49-2966 he will arrange a teleconference for us to discuss your options.
Thank you for asking as i points out exactly what I have ben saying for years…If you attempt to fight the battle in the legal arena you will absolutely lose your shirt. You have signed guaranty documents that are bullet proof in my evaluation and are fairly impossible to penetrate. You will lose the battle and the war as well as create large legal bills to add insult to injury.
My approach is all together different as I win by moving the battle to a business front, were I can win and do. There are far better strategies that will yield far better results then trying to escape a loan that you received cash from. The boom line is they lent you the money…Good luck with your approach or I should say your lawyers approach and when you are totally frustrated call for help. I will gladly provide you with strategies that will work.
This will not work, they will not and cannot accept such a request. However there are other options that will work for you that are better then what you have proposed. Call Norm at my office and arrange a tele-conference I will explain your options that will work to resolve this matter. 413=549-2966
unfortunately it is their collateral and their position is justified… unless you can convince he SBA that the remaining collaral is adequate to cover their debt, they will not release this home for sale without expecting all the equity to result in a payment to them…
unfortunately it is their collateral and their position is justified… unless you can convince he SBA that the remaining collaral is adequate to cover their debt, they will not release this home for sale without expecting all the equity to result in a payment to them…
All three lawyers are, in my opinion, not totally correct there are alternatives, however in their defense, please understand, if you go to a baker you get bread, if you go to a bankruptcy lawyer you go bankrupt…I have a better solution. CALL Norm 413 549-2966 he will arrange a tele-conference,
There is much we can do, I am sending this over to Norman our director of our Non-profit program, he will review and consider what options you may have and what we can do for you. He can be reached at 413-549-2966, Call him at your convenience.
with great difficulty, they have a process to follow, but it does not usually include direct negotiation. You can talk to non-decision makers, but never the decision makers.
yes the banks are permitted to defer payments for up to six months, ask them.
Yes I then recommend we enter into my program in which the debt can be worked out and reduced. I cannot tell more without more information. Even if they say yes I wonder what you will do when the deferment period is over should they grant it to you…If you are underwater now you will probably be underwater then.
nothing they will do easily…but we can enter into a workout and an offer in compromise with stunning results. call Norm at my office, 413-584-2581, he will arrange a no obligation teleconference for us to discuss your options.
Thanks for you prompt response. I just sent you an email and then noticed your blog response.
I will forward this information on to the owners and let them decide if they want to have the teleconference, as they are the ultimate decision makers.
Thanks again!!
thank you, I look forward to speaking with you.