SBA will not entertain “global” settlements

One thing I’ve learned from settling a whole heck of a lot of SBA business debt is that when there’s collateral + personal guarantees involved (as every SBA loan I’ve ever seen has), you cannot get away with a “global” settlement. A global settlement is an offer that releases collateral as well as terminates personal guarantees in one fell swoop.

For some arcane reason, the SBA simply doesn’t allow this type of settlement to go through. Even if a sale of the business nets 98% of the amount owed, the deficiency still falls on the guarantor who either has to pay it off in full, or submit an offer in compromise.

In some ways, this makes settling non SBA guaranteed debt easier to settle – for instance if you have a private party interesting in purchasing business assets that a loan is secured by.. even if the purchase price is 50% of what’s owed against it, in some cases (really depends on the lender + history of the loan + a multitude of other factors) you can structure it as a global settlement. The buyer takes title of the assets, and the personal guarantees of the debtor are terminated, all at the closing table.