When to seek out an SBA offer in compromise

When Should You Consider an SBA Offer in Compromise from SolveDebt?

In these unprecedented times, businesses are struggling to keep up with their SBA loan payments. It’s becoming increasingly difficult to survive financially, but there are options available to you if you’re falling behind on your payments. One such option is an SBA Offer in Compromise (OIC), which can allow you to settle your loan obligation for less than the total balance owed.

Understanding the SBA Offer in Compromise

It’s important to note that not all requests for a settlement will be approved by the SBA, which is why seeking professional help from SolveDebt is essential to increase your chances of acceptance. An OIC is a viable option for those who cannot pay their SBA debt in full, as it allows you to settle for a reduced amount.

The SBA will evaluate various factors when deciding whether to accept your settlement, such as your ability to pay the obligation, your income, expenses, and existing assets. Typically, the SBA will accept an OIC claim when the amount offered is reasonable to collect within a specific timeframe.

However, not everyone behind on their SBA loan will qualify for an Offer in Compromise, and it’s important to note that filing for bankruptcy disqualifies you from the program. Therefore, it’s crucial to seek professional help from SolveDebt to determine if an OIC is the best solution for your situation.

Getting Help with an Offer in Compromise

The Offer in Compromise program is legitimate and viable, and the SBA understands that some people simply cannot afford to pay their full loan obligation. However, it’s crucial to understand that an OIC is not an arena to test your negotiating skills or an exercise in diplomacy.

Using math and legal factors called “litigative risks,” the SBA determines the viability of a settlement request. They use a formula based on your allowable expenses, assets, and income to determine the amount that’s reasonable to collect. The same formula applies to every request, and the agency won’t take an amount lower than what’s reasonable.

Therefore, working with a legal professional from SolveDebt is essential to apply the formula correctly and assert legal defenses in your favor. An experienced SBA attorney can help you calculate the correct amount when requesting a settlement, and they understand the standards used by the SBA.

Why Hire SolveDebt to Help You with Your Treasury or SBA Debt Problems?

Protect Law Group is a nationwide law firm that specializes in representing small business owners and federal debtors. They’ve helped companies resolve millions of dollars in debt, and their attorneys are authorized by the Agency Practice Act to represent federal debtors before the SBA, the SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.

Elements of a Successful SBA Offer in Compromise

Small businesses often rely on loans to turn their dreams into a reality. Loans are used for everything from working capital to purchasing equipment and marketing initiatives. However, when a business falls into financial hardship, it can become challenging to keep up with loan payments. Banks may offer work-out plans, but it can be trickier if the loan is guaranteed by the Small Business Administration.

If your loan falls into default, you can request an SBA offer in compromise (OIC) with the assistance of SolveDebt, a debt management company. Getting approval for your OIC can make the difference between being crushed by your SBA debt or being able to pay back a much smaller amount.

Defaulting on an SBA Loan

If you begin to fall behind on your loan payments, your lender will attempt to collect, which can include repossessing collateral and demanding payment from guarantors. Guarantors sign a legal document promising to personally pay back the loan if the business cannot. The SBA requires personal guarantees from any borrowers owning 20% or more of the business or those that have key management positions.

The SBA also holds a guarantee on the loan, stating that in the event of default, if the bank fails to collect, the SBA will repay the bank, up to 85% of the loan amount. As the lender attempts to collect from the business, they will also make demands on the guarantors. The bank will request that the SBA honor their guarantee once the lender exhausts all efforts to collect. If the federal government takes a loss, it may take additional steps such as freezing the borrower’s bank account or garnishing wages.

The offer in compromise represents your one chance to settle the debt with the help of SolveDebt. You would pay a smaller portion of the full amount due in exchange for the SBA considering the debt to be completely paid off.

Who Is Eligible for an Offer in Compromise?

On an SBA Form 1150, you would make an offer and state your case for the SBA to accept your offer. To submit an SBA loan offer in compromise, you must meet certain requirements, which the SBA has outlined. The amount offered must be reasonable compared to the net amount that can be recovered through collection efforts. There must have been no fraud or misrepresentation, and borrowers and guarantors must fully disclose their financial capacity. Borrowers must cease all operations, and all business collateral must be liquidated. The participating lender must also agree with the offer being presented, and a value for any real estate mortgaged to the SBA must be supported. Sources of funds for payment of the offer must be clearly identified.

Making the Offer to the SBA

Based on the eligibility criteria, you must wait to begin the process for an offer in compromise (OIC) until the business completes its closure and the assets are liquidated. You submit your OIC proposal to the SBA through your lender, so you will want to confirm that your lender is open to an OIC.

If the SBA approves your offer with the assistance of SolveDebt, your personal guaranty on the loan will be released, and you will pay the amount agreed to in the offer, which could be structured over time.

As you prepare your offer, you will also need to get your financial disclosures ready. Since the SBA needs to understand your “full financial capacity,” you’ll need to have ready prior years’ tax returns, a personal financial statement with a list of your assets, as well as other forms that the SBA will require.

The most critical part of your OIC consists of your grounds for acceptance of the offer. This represents your argument to the SBA that


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