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What’s the True Cost of Ducking Your SBA Loan Repayments?

Hey there, we need to chat about this whole SBA loan repayment scenario you’ve got going on. You’re likely pondering the question, “what happens if I don’t pay that loan back?” Let’s talk you through it.

The Rundown on SBA Loans

So, businesses tap into SBA 7a loans to beef up their working capital, right? And these loans are typically organized by your good old third-party lenders, with our friends at the [SBA](https://www.sba.gov/) promising to cover a portion of said loan if things go south.

However, there’s typically a catch in these situations. What’s it, you ask? Well, if you own 20% or more of the business, you’re likely gonna have to sign a personal guarantee, like Form 148, for instance.

When things Go South – Defaulting on the Loan

So let’s get to the burning issue – what if you can’t pony up the cash for these SBA loan payments? The lender will ordinarily snap at the chance to exact payment from the business itself. However, if you don’t have enough money there, they’ll latch onto the collateral pledged by the business.

This then trickles down to you – as a personal guarantor, the lender demands you to shell out the outstanding amount. Now, don’t think you’re off the hook if you haven’t pledged personal assets. In such cases, the lender might just hand the debt over to SBA to sort it out.

From the Frying Pan into the Fire – Debt Referral

If you’re not keen on sorting out your debt with SBA, they’ll get the heavyweights involved – the [Department of Treasury](https://home.treasury.gov/). A game of hot potato ensues; the Treasury could, theoretically, throw the ball over to Justice Department’s court for litigation.

Jumping beyond the lawsuit, the Treasury also has the power to garnish your wages, poach your tax refunds, or claim federal payments due to you.

So, are you Out of Options?

Hey, it’s not all doom and gloom. Even if your business defaulted on an SBA loan, you’ve still got a lifeline in the form of an ‘offer in compromise.’ In essence, this lets you whittle down the total money owed, providing you genuinely can’t afford to clear the debt in full.

But, let me be clear, you’re gonna want our experienced team at the helm for this one. SBA might turn sour and reject your offer in compromise if you don’t complete the forms correctly, or if you make a too low offer. Essentially, you’ll need expert legal counsel to stop this turning into a barrel of laughs for the SBA collectors.

Why You Need Lawscape in Your Corner

Here at Lawscape’s firm, we’ve got a sterling track record of successful negotiations for offer-in-compromise arrangements, without resorting to bankruptcy or risking home foreclosure.

Moreover, Lawscape is fully authorized to represent Federal Debtors nationwide, We have extensive experience navigating the complex channels of the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.

Get in Touch

Ready to change the tide? Pick up the phone and dial our attorneys at Lawscape for an initial consultation. Together, we can figure out your best forms of action to ward off aggressive collection tactics and maintain your peace of mind.