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SBA Debt Relief: A Lifeline for Struggling Businesses

Times are tough, that much is certain. Maybe your business took a major hit during the pandemic – or perhaps you’ve been battling fierce competition, industry shifts, you name it. Whatever the reason, if you’re staring down mounting debt and those SBA loan payments are becoming crippling – it’s time to explore your options for SBA debt relief.

The High Stakes of Defaulting

Let’s get one thing straight: defaulting on an SBA loan is not something to take lightly. We’re talking major potential consequences like:

  • Damaging your credit score
  • Risking personal assets used as collateral
  • Facing aggressive collections efforts
  • Potential bankruptcy

Yikes, right? But take a breath – because believe it or not, the SBA actually wants to help businesses get back on track before things spiral too far. They have multiple debt relief options that could be game-changers.

A Fork in the Road: Your Two Main Options

When it comes to SBA debt relief, you’ve essentially got two major paths:

1. SBA Offer in Compromise

This allows you to settle your SBA loan for less than the full balance owed. Yes, you read that right – the SBA could be open to accepting a lump sum payment that’s less than what you currently owe.

But how much less? Well, that’s where it gets tricky: the SBA looks at your income, expenses, assets, and general ability to pay. It’s a highly individualized process. You’ll need to make a solid case and be prepared to open up your financial records.

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2. SBA Debt Restructuring

Can’t afford a lump sum payment, even if discounted? Debt restructuring may be your best bet. This could involve:

  • Extending your loan term to reduce monthly payments
  • Deferring payments for a set period of time
  • Approving a fixed debt amount and payment plan

The goal is customizing a solution that helps you get current on your loan without defaulting, while providing enough financial breathing room to sustain operations. Again though, you’ll have to plead your case with documentation galore.

The “What Ifs” You Need to Consider

At this point, you might be thinking: “Okay, that all sounds good in theory – but what if the SBA doesn’t approve my debt relief request?”

It’s a valid concern. The SBA is under no obligation to agree to debt relief terms. If they feel you can’t realistically repay any debt, or that your business is no longer viable, they may deny your request.

And then what? Well, your options could include:

  • Filing bankruptcy to discharge the SBA loan debt
  • Attempting to renegotiate the loan directly with your SBA lender
  • Exploring selling assets or downsizing operations

It’s not an ideal scenario by any means. Defaulting on an SBA loan can have major ramifications – including potential personal liability if you pledged personal assets as collateral.

That’s why being proactive and pursuing SBA debt relief before defaulting is so crucial. The more rungs you have left on that metaphorical ladder, the better your chances of climbing out of this debt mess.

Navigating the SBA Debt Relief Process: DIY or Get a Pro?

Here’s the million dollar question: should you tackle the SBA debt relief process solo, or enlist some professional help?

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On one hand, doing it yourself means no attorney fees and maintaining control. The counterpoint? SBA debt relief applications are notoriously complicated, document-intensive affairs. One misstep or missed requirement could derail the whole thing.

Many businesses find the expertise of a debt relief lawyer invaluable for:

  • Properly valuing assets and calculating an appropriate settlement amount
  • Identifying which debt relief program is the best fit
  • Compiling a rock-solid application package
  • Understanding SBA loan policies and negotiating with decision-makers

The bottom line? The SBA won’t automatically let you off the hook. You need a strategic, airtight approach – which is why many borrowers gladly invest in professional guidance to improve their chances of approval.

Your Next Move: Taking Action Before It’s Too Late

Look, dealing with mounting SBA debt is stressful as hell. But avoiding the issue or resigning yourself to defaulting isn’t the answer. You’ve got options on the table – imperfect as they may be – to mitigate the damage and get your business back on firmer financial ground.

The key? Acting decisively before that debt bomb goes off. Every month of overlooked payments makes your situation more precarious and potentially irreparable.

Take that first courageous step today: assess your financial standing, explore your SBA debt relief avenues, and chart a path out of this mess. It won’t be easy, but you’ve got this. After all, when has running a business ever been easy?

The hardest battles are the ones most worth fighting. Don’t let that SBA debt be the hill your business dies on. Fight back, find a solution, and revive your money-making machine.

Delancey Street is here for you

Our team is available always to help you. Regardless of whether you need advice, or just want to run a scenario by us. We take pride in the fact our team loves working with our clients - and truly cares about their financial and mental wellbeing.

"Super fast, and super courteous, Delancey Street is amazing"
Leo
$500,000 MCA Restructured Over 3 Years
"Thanks for helping me in literally 24 hours"
Jason
$250,000 SBA Loan Offer in Compromise
"Great choice for business owners who need a trustworthy partner"
Mary
$350,000 MCA Restructured Over 2 Years

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