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 a number of others 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 for real reliable information.
One must be knowledgeable to launch a meaningful defense and a powerful offense.
Start here, then call me. <a name=”9858953758″></a>
SBA guaranteed loan workout myths….do not believe everything you hear
Do you need a lawyer for an SBA workout?
SBA Loans can be dangerous. Be careful.
Do not feel bad about defaulting on your SBA guaranteed loan, your covered.
SBA workouts, bank workouts, all workouts, are a business negotiation, not a legal issue.
Debt workouts…, too good to be true?
Co-signing a guaranty to the SBA or any note. What does it mean?
Surprise! No negative credit issues from defaulted SBA guaranteed loans!
…call Norman, in my office, 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 me we can talk about it.
An SBA guaranteed loan workout…what can be done?
There is this urban lore that I frequently hear that claims that SBA loans cannot be worked out, paid off short with a compromised conclusion and with forgiveness of the shortfall.
It ain’t so. It can be done. I do it for my clients. (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 and the timing is correct.
In fact the SBA (Small Business Administration) has its own Offer In Compromise forms, a committee which accepts and rejects and it is even willing to indirectly, through your corresponding banker, negotiate a fair resolution for a defaulted loan. In fact it is also possible to talk with an SBA representative, although not a directly involved decision maker.
That’s both good and bad as its both the bank and the SBA that must be satisfied and each has its own rules and requirements. But in the end it’s the SBA that counts the most, although it’s the banks you talk with the most and that makes for some confusion as frequently the bank or its attorneys are not telling you the truth…at all. I hear stories about misinformation everyday!
The SBA does however have some strong requirements that are fast and hard and must be understood to avoid wasting time and being frustrated.
1. The SBA 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 your spouse 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. If the debt is guaranteed by both husband and wife, there are greater difficulties which must be worked out effectively and can be, 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.
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 10-12 months. The review committee is in Virginia, and services the entire country. It 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 mixed, mostly depending upon the quality of the preparation and presentation, tough but fair, I would say.
The SBA is 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 universally rejected, demanding a higher offer whch many applicants provide. There are alternate strategies which work more effectively then simply raising the ofer.
Once rejected, I have had success in modifying the offer further, the “second wave” negotiation I 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, resulting in a lower offer as a response.
This second pass is very important and can yield extraordinary results.
You know were you are headed before anyone else, thus planning is critical for the best outcome for the borrower. Preparation for a workout is critical for the best results.
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.
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.
I would be delighted to review your case 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. You can proceed with it or I can implement the plan on your behalf, that’s your decision once you are more knowledgeable about what the possibilities may be.
I await your call.
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October 29, 2009 at 7:18 am10
We have a SBA disaster loan on our home since 1998, (approx 50,000 still owedand) can’t seem to find any info about our situation…. We have an excellent credit rating, have paid all payments on time…house flooded 2 more times, had insurance those times, still did not cover losses…. have health issues, can’t care for a home anymore, or handle the stress of another flood …need to move closer to children in another state.. value of home is below what is owed …. SBA sold the loan to Aurora a few years ago…. over the last year have contacted SBA, senior citizen groups, senators, white house, etc. get the run around… Is there anything we can do short of bankrupcy?
September 18, 2009 at 7:18 am09
Post Katrina we expected to do more business. The company has not done any business. Tourism in New Orleans not expected to increase to prekatrina levels for another 5-10 years. We owe $175,000 SBA loan that we received post katrina. SBA says these loans will never be pardoned. We need help. Under lots of distress because business isn’t doing well after 30 years in business. Is affecting our family tremendously. Have had to put bills on credit cards. We had to put the house as collateral for the SBA loan. Can you pleaseplease advise for a more than distressed individual.
Cathy
September 16, 2009 at 7:18 pm09
Don,
I have a SBA Loan from a business partnership, where I signed the SBA loan as a co-guarantor but did not put up collateral. My business partner at the time put his house up(and his wife signed) as the collateral. Since then he filed for Bankruptcy(2007). The bank came to me for payment. My wife never signed any documents. All my assets(very little) are in both names hers and mine. I can not make the loan payments anymore. I left the business in 2006, two month after the loan was signed. I tried to be released from the loan but my partner was not willing to do that in 2006. When I left the business more then 85% of the loan was still unused. The loan was for 100K.
When the bank contacted me in 2007, I negotiated with my lawyer to make a $4000 down payment and $900 a month there after. Lost my job in 2008, and my income has since been cut drastically. I was struggling to make the payments then, now we have paid over $20,000 towards the loan.
Any thoughts on what I should do? Can a workout be done from here? My lawyer told me they can not touch my house because my wife did not sign anything, is this true?
A Judgement is not a option because of my line of work!
September 17, 2009 at 7:18 am09
You had best file an offer in compromise as rapidly as you can or you will be seeing a judgment against you. That will work it out.
August 24, 2009 at 7:18 pm08
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?
August 24, 2009 at 7:18 pm08
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.
August 17, 2009 at 7:18 pm08
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?
August 18, 2009 at 7:18 am08
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.
August 20, 2009 at 7:18 pm08
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?
July 26, 2009 at 7:18 pm07
Склоняю голову!Благодарствую Отличный пост получился Так держать!
July 26, 2009 at 7:18 pm07
Очень понравилось
July 26, 2009 at 7:18 am07
Спасибо за замечательную информацию!
July 26, 2009 at 7:18 am07
Класно!
Понравилось
July 25, 2009 at 7:18 pm07
Спасибо! Проглянув глазами аж задумался…
+1
July 25, 2009 at 7:18 pm07
Хорошо пишите!
Блог в ридер!
July 25, 2009 at 7:18 am07
ПРОСА СУПЕР!
+1!
July 24, 2009 at 7:18 am07
Спасибо!
Отличная информация!
July 24, 2009 at 7:18 am07
Привет
неплохо- заинтересовало…
July 23, 2009 at 7:18 pm07
Привет,аффтар!!!
У вас на посте буквы как билиберда отображатся- пофиксите, ато хочется узнать инфу
July 23, 2009 at 7:18 am07
Ку,ТС!!!
Сильно понравилась статья. полистал новости, то скажу, что печатаете очень познавательно и выбираете полезные рубрики информации. Большое Спасибо!!!
July 21, 2009 at 7:18 am07
Драсте,блогер!!!
Предлогаю вам,аффтар, обменятся ссылками или статьями- очень понравился ваш сайт.
Для ваших пользователей предлогаю скачать фильмы, игры, музыку софт и много другое.
С уважением и поклоном
July 16, 2009 at 7:18 am07
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?
July 16, 2009 at 7:18 pm07
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
July 4, 2009 at 7:18 pm07
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
July 4, 2009 at 7:18 pm07
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.
July 4, 2009 at 7:18 pm07
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.
May 26, 2009 at 7:18 pm05
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
May 27, 2009 at 7:18 am05
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.
May 27, 2009 at 7:18 am05
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!!
May 26, 2009 at 7:18 am05
Шдето я что то подобное уже видел
May 24, 2009 at 7:18 pm05
И придратся не к чему, а я так люблю покритиковать…
May 23, 2009 at 7:18 pm05
Отличная статья Спасибо огромное
May 22, 2009 at 7:18 pm05
Кстати, если закончаться фото Одри, то можешь в фотошопе старые фото накладывать на новый фон, так и разнообразие будет и ты работать продолжишь
May 21, 2009 at 7:18 pm05
То что бредомысли это точно
Видно настиг творческий кризис. Мысле нет о чем писать
May 5, 2009 at 7:18 pm05
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.
April 13, 2009 at 7:18 pm04
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.
April 13, 2009 at 7:18 am04
Thank you. I will ask today. Then if they say no what options do I have and what can I tell them?
April 13, 2009 at 7:18 am04
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.
April 10, 2009 at 7:18 pm04
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?
April 11, 2009 at 7:18 am04
yes the banks are permitted to defer payments for up to six months, ask them.
April 8, 2009 at 7:18 pm04
us there a chance at all of mitigating the amount presently owed?
April 8, 2009 at 7:18 pm04
My loan was directly from the SBA. Can I negotiate directly with them?
April 8, 2009 at 7:18 pm04
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.
March 28, 2009 at 7:18 pm03
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
March 29, 2009 at 7:18 am03
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.
March 24, 2009 at 7:18 pm03
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?
March 24, 2009 at 7:18 pm03
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,
March 7, 2009 at 7:18 am03
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
March 7, 2009 at 7:18 pm03
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…
March 7, 2009 at 7:18 pm03
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…
February 24, 2009 at 7:18 pm02
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.
February 25, 2009 at 7:18 am02
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
February 20, 2009 at 7:18 pm02
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.
February 21, 2009 at 7:18 am02
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.
February 20, 2009 at 7:18 pm02
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
February 20, 2009 at 7:18 pm02
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.
February 18, 2009 at 7:18 pm02
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
February 16, 2009 at 7:18 pm02
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?
February 16, 2009 at 7:18 pm02
an offer in compromise….call for details.Norm will create a tele-conference for us to discuss.
413-549-2966
February 7, 2009 at 7:18 pm02
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!
February 8, 2009 at 7:18 pm02
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
February 6, 2009 at 7:18 pm02
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!
February 8, 2009 at 7:18 am02
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.
February 5, 2009 at 7:18 pm02
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!
February 6, 2009 at 7:18 am02
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.
February 5, 2009 at 7:18 am02
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
February 5, 2009 at 7:18 am02
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.
February 3, 2009 at 7:18 pm02
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. ?
February 3, 2009 at 7:18 pm02
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
February 3, 2009 at 7:18 am02
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?
February 3, 2009 at 7:18 am02
yes probably, however I need additional information to be certain, call me 413-549-2966 Norm will arrange a tele-conference.