The Best Things about SBA Loans
SBA loans are made to help small businesses for them to get up and running. This can actually be risky, which is why a federal government will help entrepreneurs who could not get a loan in any normal circumstances. This is in fact helpful to our economy.
The SBA in fact does not make the loans itself, but it actually makes it possible through giving guarantees on the loans that are made by other lending institutions. The thing that happens in case of a default is to where the lending bank contacts you and then explains the details about the default and to how you could give remedies to 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. It also includes the sale process of the assets that is being used 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. The lender can actually close the business and may foreclose the property.
If in case it reaches a point where the lender has used all of the options on recovery, they are going to make claims to the SBA. If in case the SBA guarantee is going to kick in and that the federal government repays the share of the loan for you.
With the lender already paid, you now will deal with the SBA. You will get a notice coming from the SBA which will explain that you will need to pay the remaining balance or perhaps present an “offer in compromise”. This means that in a situation to where the SBA reviews your financial situation and accept less than 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 does not have any interest with the payment plans that you can’t meet.
If the SBA accepted the offer, all sides will be happy because you could meet up with 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. There are also cases sometimes where the SBA will send 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.
Once you have settled the debt, you can then move forward and then focus to your financial health recovery.