The Banks will not negotiate debt forgiveness for a defaulted SBA guaranteed loan, unless…

If you have an SBA guaranteed loan you must be aware of the facts. The banks have a guaranty which they intend to protect at all costs. The SBA, in its desire to make certain the banks do not sell them out because they are guaranteed and thus do not pursue liquidation as aggressively, the SBA holds the guaranty over the fire and will retract it if the banks do not ‘exhaust their legal remedies’ by foreclosing on the collateral and liquidating it for the benefit of the bank.

The SBA has withdrawn their guaranty enough times so every SBA lending bank understands this issue and upon default of the borrower, they bring out the heavy artillery and refuse to discuss alternatives. Their intent is to protect their guaranty, as it typically makes them whole preventing loss, thus, they over react and ‘kill the borrower”.

Borrowers are frequently confused by this apparent split personality, which occurs, and are frequently frustrated by rejected reasonable requests for support and help from the bank.

Understanding this important issue will help clarify why you are having such a difficult time with your bank if you are in default.

Once entering default, please also understand that you are only a short time period away from a lawsuit and then foreclosure and liquidation by auction. It is hard to predict exactly how long it will take as there is great variation, but be assured whether or not it is one month or 6 months foreclosure is their only game plan and will occur if you do nothing to prevent it.

The only solution is either pay it off, come current and keep paying, or suffer liquidation.

That’s the reality. The banks cannot and will not negotiate alternatives in an SBA guaranteed loan in default…unless it is approached after satisfying the SBA standards and requirements. Unfortunately their requirements are  devastating to the defaulting borrower.

We have devised alternative strategies which help us navigate these issues successfully, but the underlying issues are the agreements between the bank and the SBA that ‘they (the bank) must exhaust their legal remedies’ or lose their guaranty.

Call us for help, there are no other strategies which will provide the best solution possible for both the banks and the borrowers other then ours. We have the plan and it works. Call us for help, 413-584-2581. Norm will arrange a no-obligation teleconference for us to discuss your options.