The Best Things about SBA Loans
SBA loans are made to help small businesses for them to get up and 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 really helpful to 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 on a default is where the lending bank will contact you and will also explain the details on the default and how you can provide remedies for 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 also includes the business assets and when you acquire larger loans, it could even include your properties like your home. A lender can in fact close the business and they also may foreclose the property.
When it reaches a point where the lender had used all of the options on the recovery process, they can actually 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.
After the lender has been paid, you now will have to deal with the SBA. You are going to get a notice from the SBA that explains to you that you have to pay the remaining balance or 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 for such situations is where you should present a settlement amount which is substantial but one that needs to be sustainable as well. 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. If ever the SBA rejects the offer, you get an opportunity to recalibrate and be able to submit again. There are instances sometimes where the SBA sends the account to the treasury department. In these kind of instances, the treasury department actually have different collection options.
You may have the option to settle your loan with the treasury department, but this can be a tedious process. This in fact is why it is far better to look for early solutions when the loan is still at its 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.