Experienced Legal Advocacy

SBA Loan Matters

2020 brought lots of hardships to small business. It also brought new opportunities for many small businesses to borrow SBA guaranteed money from their banks, and in some cases, directly from the government itself. Landmark Advisors works with its clients to help them navigate the waters of seeking and obtaining SBA loans when they are needed for working capital or acquisitions.

On the other hand, more businesses than ever were unable to meet the debt service payments they already owed on SBA loans and went into default on working capital, acquisition and other cash flow loans financed via SBA programs.

Landmark’s legal team brings 30 years of experience assisting clients in obtaining and documenting the transactions that enable them to acquire capital and employ it where it helps them achieve their business goals, but also to solve the challenging problems that arise in conjunction with a default on SBA debt.

When working with clients on any kind of loan workout, debt settlement or refinancing arrangement that gets its clients out from under the extraordinary burden of debt, especially when loans are in default.

Dealing with the SBA is unique. It’s a large, federal government agency with greater power than a typical bank. It rarely uses it’s powers to collect in the ways it could, but it can make life very difficult on a borrower who is unable to repay debts it owes on loans generated with guarantees from the SBA.

The first thing to bear in mind is that a workout with the SBA is different from general loan forgiveness. Although, it may, and hopefully will, include at least partial forgiveness of outstanding debt, it is not what was classified as loan forgiveness under the CARES Act of 2020.

The loan forgiveness program under the Payroll Protection Program instituted under the CARES Act provides for forgiveness of 100% of the amount due in a loan provided through the PPP in 2020.

With all other SBA loans, there is typically no loan forgiveness whatsoever, and the debt itself is considered nondischargeable in bankruptcy. This means that, with few exceptions for certain types of hardship, even filing bankruptcy will not allow you to escape SBA debt, and the nondischargeability applies to accrued interest and penalties as well, which can be very steep.

All of that means you need a highly skilled expert to assist you with the challenges you face if you’ve defaulted on an SBA loan. There are a few, but very few ways to reach a compromise with the SBA that will allow you to get out from under what can be a very heavy burden of debt, to restore your credit and to regain a position that will enable you to achieve your future business goals.

SBA debt opens up a window of great opportunity for those in position to make the most of the business opportunities it funds. Like anything, it comes with a price. If you are in a position where you need to resolve what seems like an insoluble debt problem, please contact Landmark Advisors today.