SBA Loan Collection Process

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What is the SBA Loan Collection Process?

• Distressed Loan Advisors
• www.jasontees.com

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What is the SBA Loan Collection Process?

• Small Business Administration loans intend to
  help a small business owners to set up and run
  business in difficult times. These loans acts as
  a kickstarter for our economy. But, when a
  business fails, an SBA loan default may occur. If
  you are in this situation, you need to understand
  collection process properly.

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If you want to settle

• Step 1 Default.
• You need to violate the terms of your loan deed,
  in most cases this means missing payments. While
  every bank is different, some send letter after
  30 days of delay or other can send after 60 days.
  After 60 days, banks start to have serious
  concerns about the payment.

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• Step 2 Demand Letter
• Using letter banks start giving official notice
  that payment is late and this is not correct.
  Demand letter not necessarily mean that bank is
  going to sue. But, this is the first step from
  the lender's side. If you receive a demand letter
  after defaulting on your SBA loan, this is NOT
  the time to hide or avoid the issue. You are on
  their radar, and it needs to be dealt with sooner
  rather than later to give yourself the best
  chance at a good outcome.

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• Step 3 Cease Operations and Liquidate Business
  Assets
• Before the bank or SBA will consider settling an
  SBA debt, this business needs to be closed or be
  sold as a whole or in pieces. The sale of the
  business needs to be legit.

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• Step 4 Submit SBA Offer In Compromise to your
  lender.
• Among other documents, the SBA requires forms 770
  (PFS some lenders who are new to OICs
  mistakenly use form 413) and sba form 1150 (Offer
  In Compromise).