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 actually very helpful for 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.
If you are unable to make the payments which are necessary, the lender is going to start on the collection on what was being agreed on the loan. It likewise includes the sale of the assets which you used for collateralizing the debt. It actually includes business assets and if you will get larger loans, this may include even your home. The lender may actually close the business and they could also foreclose the property. Check this site to know more!
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. If in case the SBA guarantee is going to kick in and that the federal government repays the share of the loan for you.
After the lender has been paid, you now will have to 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”. It means that in a situation to where the SBA is going to review your financial situation and also accepts less than what is 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 actually has no interest with the payment plans that you could not meet. Check out this website at http://www.dictionary.com/browse/law for more info about lawyers.
If the SBA accepted the offer, all sides will be happy because you could meet up with the repayments. When the SBA will reject your offer, you will have the chance to recalibrate and to submit again. There are also cases sometimes where the SBA will send the account to the treasury department. In such cases, the treasury department have different options.
You actually have the option in settling the loan with the treasury department, but it’s a tedious task to do. This in fact is why it is far better to look for early solutions when the loan is still at its original lender.