Do You Have To Pay Back a Business Loan if the Business Fails?
Starting a business is an exciting venture, but what happens if it doesn’t go as planned? Unfortunately, not all businesses are successful, but it’s a known fact that most businesses must take out loans to stay afloat. If your business fails, you may wonder whether you still have to pay back your business loan. The answer is yes, and it’s essential to understand the consequences of defaulting on an SBA loan. At SolveDebt, we have experienced SBA debt attorneys who can help you find realistic solutions to your SBA loan debt problems.
What Does Defaulting on a Loan Mean?
When you miss a payment, it doesn’t necessarily mean that you are defaulting on your business loan. However, most lenders consider loans to be in default after missing two to three payments, and they will report you to a credit agency, which will record any further missed payments. If your loan defaults, your lender will reach out to you and offer options for creating a more realistic payment schedule or ask why you have missed your payments. Each lender considers loan default at different points, and it’s crucial to review your loan agreement to determine the specific point for your small business loan. If your business has failed, it can be difficult to get back on track.
What Happens if You Default on a Business Loan?
The more payments you miss, the more aggressive your lender’s collections practices become. Depending on the amount you owe or how long you have been missing payments, your lender’s collections practices may change. If your loan is backed by collateral, such as your business equipment, your lender may take that equipment to recoup some of the money you owe. If your business has failed, you may be able to cover the amount of money you owe by selling off your assets.
A Personal Guarantee
If you have made a personal guarantee on your business loan, the stakes are even higher. A personal guarantee means that you are personally responsible for repaying the loan, even if your business has failed and cannot pay back the loan. Depending on the situation, your lender can come after your personal assets instead of just your business assets.
What Happens if I Default on an SBA Loan?
If you default on an SBA loan, the process is different than with other types of business loans. Your lender will collect the collateral associated with the loan and submit a claim to the Small Business Administration. The SBA will pay the lender for the portion of the loan that they have guaranteed and then contact you to create a plan for repaying your debt with the SBA directly. The SBA guarantees up to 75% to 85% of business loans, and you may be able to negotiate a smaller payment with our experienced SBA lawyers at SolveDebt.
Contact SolveDebt for Help
Navigating the US Treasury Debt Collection process can be challenging, and defaulting on a loan can be overwhelming. At SolveDebt, we understand the struggles of business owners and the legalities involved. Our SBA debt attorneys are here to help you find realistic solutions to your SBA loan debt problems. If you owe more than $30,000 and your business has failed, contact us today to schedule a consultation with one of our experienced SBA debt attorneys. We are committed to helping you resolve your debt problems and get back on track.
Why Choose SolveDebt?
At SolveDebt, we are a nationwide debt management company with a deep understanding of the law and a commitment to professionalism. Our experienced SBA debt attorneys have helped numerous business owners find realistic solutions to their SBA loan debt problems. We understand that defaulting on a loan can be an emotionally charged and overwhelming experience. That’s why we use compelling language and show-not-tell writing to engage our readers and ensure that they fully understand their options.
Our SBA debt attorneys provide a range of services to help you resolve your SBA loan debt problems. We can help you negotiate a repayment plan with the SBA, provide legal advice on how to handle debt collectors, and help you understand the legal options available to you. We can also assist you in applying for loan forgiveness or settling your debt for less than you owe. Our team of professionals will work with you to find a solution that meets your specific needs and helps you get back on track.
Table: Common SBA Loans
Here is a table of some of the most common SBA loans and their respective guarantee percentages:
Loan Type Maximum Loan Amount SBA Guarantee Percentage
7(a) Loan $5 million Up to 85%
CDC/504 Loan $5.5 million Up to 85%
Microloan $50,000 Up to 85%
Contact Us Today
If you are feeling overwhelmed by SBA loan debt, don’t hesitate to contact us at SolveDebt. Our experienced SBA debt attorneys can help you find realistic solutions to your debt problems and get back on track. We are committed to using emotionally charged language and show-not-tell writing to ensure that you fully understand your options and can make informed decisions. Contact us today to schedule a consultation with one of our experienced SBA debt attorneys.