Are SBA Loans Helpful?
SBA loans actually are made to help any small business to start and get running. It can in fact be risky, which is the reason why the federal government helps entrepreneurs who have troubles in getting 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. 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.
When you cannot make the payments which are necessary, the lender then starts on collecting on what were stated on the agreement of the loan. It also includes the sale process of the assets that is being used to collateralize the debt. This likewise includes business assets and if you ever get much larger loans, it could even include your home. The lender may actually close the business and they could also 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. If in case the SBA guarantee is going to kick in and that the federal government repays the share of the 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 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. Sometimes there are instances to where the SBA sends the account towards the treasury department. On such instances, the treasury department comes with 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.
Once you have settled the debt, you can then move forward and then focus to your financial health recovery.
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