HomeThe SBA’s New Standard Operating Procedure (SOP) Regarding SBA Personal Guarantees

The SBA’s New Standard Operating Procedure (SOP) Regarding SBA Personal Guarantees

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How’s it going? So, I get it – you’re likely grappling with either SBA Personal Guarantees, maybe an SBA loan default, or even DOT collection action. Well, buckle up, because I’m about to break down some rather complex stuff for you. My name’s Lawscape from Lawscape, and together we’ll navigate this rough terrain. We offer solutions and guidance to help you handle SBA loan issues and Treasury Department actions, including educating you on the ins and outs of SBA offer in compromise or DOT compromise package.

What’s this New SOP About, Anyway?

You probably heard something about the new Standard Operating Procedure (SOP) the SBA recently introduced. Well, yeah, it became official on the first day of January 2014, and it’s been a game-changer. This SOP, known as 50 10 5(F), changes the game when it comes to the collateral prerequisites for SBA loans, particularly towards what borrowers’ principals must pledge or mortgage.

The new SOP now stipulates that principals are only required to offer their personally owned real estate as collateral if their loan isn’t already fully secured. Moreover, there is no longer a requirement for these principals to pledge publicly traded securities or other non-real estate assets. It’s a whole new ballgame.

How Does This Affect You?

With these changes, plus the proposed repeal of the resources test, this means that individuals and entities with substantial personal wealth can serve as personal guarantors on SBA loans. These folks will have lots more at stake and are likely to have the resources necessary for securing litigation defense counsel, protecting their valuable assets, and possibly even making lender liability claims against their lender or bank.

Under SOP 50 10 5(F) lenders now have the room to use their custom-made SBA personal guarantee agreements, unlike before when they had to use SBA Form 148 (or Form 148L). The only condition is that these personal guarantee agreements should be “equivalent” to the terms in the SBA’s Forms.

Some Cautions for SBA Lenders

What this means is that SBA lenders may be able to create and include clauses that were not part of the SBA’s standard forms in their personal guarantee agreements. However, from the perspective of many personal guarantors of defaulted SBA Loans, it would be wise for these lenders to think twice before taking advantage of this chance to craft their own personal guarantee agreements.

Favoring clauses that are entirely favorable to lenders at the expense of the personal guarantor just won’t cut it. They may easily find themselves having to defend their personal agreement based on arguments such as unfairness, bad faith, breach of covenant of good faith and fair dealing, contract of adhesion, unconscionability, and misrepresentation. You really don’t want to be on such shaky ground, do you?

The Likely Implications of SOP 50 10 5(F)

As I previously noted, changes with the terms regarding personal guarantees, thanks to SOP 50 10 5(F), will likely become crucial as lenders start enforcing their SBA personal agreements against for-guarantors who savvy enough and with the personal resources to retain defense counsel in contesting the claims of lenders.

The dynamics between SBA personal guarantors of defaulted SBA loans and, presumably, victimized lenders and banks has seen a dramatic shift. It’s crucial for all parties to understand this new frontier and gear up for any possible showdowns.

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The attorneys in our office, Lawscape that is, are ready and more than willing to help you navigate your doing dealings with SBA or DOT. Don’t worry, no matter how dire or complicated your situation seems, we’ve got your back. Whether it’s an SBA or DOT demand letter response, understanding SBA loan foreclosure, or learning about tax offset programs, we can explain it all.

Feel free to read our blog to get a better understanding of subjects that might still be unclear to you or contact us right away if you have specific questions. We’re more than ready to work with you during this critical phase of your life.

Why Should You Trust Us with Your Treasury or SBA Debt Challenges?

Well, we’ve helped resolve millions of dollars in SBA debts via offer in compromise and negotiated repayment agreements with no need for bankruptcy filings or home foreclosure scenarios. We’ve also defended substantial Treasury Debts via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing disputes, private collection agency representation, compromise offers, and negotiated repayment agreements.

Plus, our attorneys have the approval under the Agency Practice Act to represent Federal Debtors not only nationwide but specifically before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service. In short, we’ve got extensive skills, experience and we know our way around these circles.

Lawscape Can Help You Manage Your Business Debt

If you’re struggling with business debt, we can help you understand your situation. During the initial consultation, we’ll go over the contract, and other legal documents you signed. After that, our firm will work with you to get a better understanding of your situation, and help you come up with a game plan that keeps your business alive. 

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Everyone has different types of business debt. What matters is that you take it seriously. Regardless of whether it’s secured, or unsecured, you need to work with a firm that understands how to negotiate, reduce, settle, and manage, this business debt. 

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