Are SBA Loans Helpful?
SBA loans actually are made to help any small business to start and get running. It can be risky, which actually is why the federal government offers help to entrepreneurs who are not able to get a loan under normal circumstances. This is actually very helpful for our economy.
The SBA does not really make the loans itself, but it helps to make it possible by giving you guarantees on the loans which are made by the other lending institutions. What happens in the case of a default is to where the lending bank contacts you and will explain about the details of the default and how you can actually remedy it.
In case you are unable to make the necessary payments, the lender starts their collection process as what was being stated on the loan agreement. This also includes the sale of the assets that you used in order to collateralize the debt. It actually includes business assets and if you will get larger loans, this may include even your home. A lender can in fact close the business and they also may foreclose the property.
If ever this will reach a point to where the lender used all the options for the recovery, they will make claims to the SBA. During this time, the SBA guarantee kicks in and that the federal government will be the one to repay the share of your loan for you.
Once that the lender has been paid, you are then going to deal with the SBA. You will be able to acquire a notice that comes from the SBA that explains to you that you will have to pay the remaining balance or that you should present an “offer in compromise”. This situation means that the SBA is going to review your financial situation and may accept less than what’s being required. The key in these kind of situations is to present a settlement amount that’s substantial and one that is also sustainable. The SBA in fact has no interest on payment plans which you cannot meet.
When the SBA has accepted your offer, all sides are going to be happy because you are able to make the repayments. In case the SBA is going to reject the offer, you will be given the opportunity to recalibrate and for you to submit again. Sometimes there are instances to where the SBA sends the account towards the treasury department. In these kind of instances, the treasury department actually have different collection options.
You actually have the option in settling the loan with the treasury department, but it’s a tedious task to do. This is why it is best that you are going to look for solutions at the start of the process to when the loan is still at the original lender.
After settling on the debt, you will be able to move forward again and focus on the recovery process of your financial health.