A You Need to Know About SBA Loans
What is the worst that can happen in case of an SBA loan default?
It is not advisable to default on SBA loans because of the severe consequences involved. Your house could end up being put up for foreclosure if it has equity. Your business can be closed down and all of your office items sold. They can find a personal judgment against you and serve you with a subpoena of which you will need to explain and respond on time before they send the police to arrest you. Generally, defaulting on SBA loan is not advisable and you ought to be on time when settling it.
Does my settlement offer go through my creditor or straight to the SBA?
It relies on if your lender has referred the matter to the SBA. Whenever a person defaults on the SBA loan, the lender will continue handling your issue until they run out of options with regards to the loan recovery.
Once this stage is reached, the lender is left with no choice but to forward your file to the SBA for further follow up on how to settle this loan. Once the matter has reached the SBA, a letter will be written to the borrower and guarantors of the loan. Once you receive this letter, then you have the go-ahead to deal directly with SBA when it comes to settling your loan. Let’s say you have defaulted your loan payment over a couple of months, and your collateral might not have been liquidated, you will, therefore, still need to deal with your lender for a while.
My Creditor has not gotten back to me with regards to my SBA settlement offer. Am I off the hook and does the SBA forgive loans?
Probably not. Currently, the “workout” areas at many banks have been busting at the seams. They have a lot of files from thousands of clients of which they cannot be able to go through all of them all at once. Lenders might not be in a position to call you or respond to your emails because of the nature of work they are doing, but it should not be mistaken to mean that they have offered you SBA loan forgiveness.
My bank told me that because my loan is guaranteed by the SBA, they cannot settle. Is that accurate?
This is not accurate, but, it has been a growing concern that people ask nowadays and needs to be answered. The SBA has come up with a procedure that involves specific forms that include SBA form 770 and SBA form 1150 to allow people settle their loan for less than what they borrowed. If your bank is always blaming the SBA when it comes to settling these loans, the chances are high that they have never lent the SBA and don’t know what the SBA offer in compromise entails or they just don’t want to pay up.
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