San Diego, CA -- (SBWIRE) -- 03/18/2014 -- Of the more than 20 million small businesses operating in America, at least 20 percent will experience some degree of financial difficulty; furthermore, financial advisors catering to this sector report an estimated 350,000 are forced to close each year. This leads to repercussions for business owners and other guarantors, all lenders they are indebted to and the Small Business Administration alike. In an effort to assist those involved, a spokesperson for the Protect Law Group has announced efforts to educate small business owners regarding solutions for SBA loan problems.
The firm's spokesperson explained, "When faced with unstable finances, many small business owners feel their only option is to determine which form of bankruptcy they should seek. This is certainly not always the case, and our goal is to help negotiate and settle any 7(a) and 504 loan issues. By working out a resolution, we can often prevent collection efforts from lenders as well as the SBA."
The SBA's loan guarantee program has proven to be an invaluable resource for countless small businesses, allowing them to borrow greater amounts than would be possible without backing by the SBA. This additional capital provides the opportunity for expansion; however, being able to borrow more money also means the debtor carries a heavier burden of responsibility in meeting the terms of the loan. While this may not be problematic when the business is thriving, even a slight setback could be detrimental.
Members of the Protect Law Group note 3 avenues of remediation are available, each of which applies to distinct situations. An SBA Loan Deferment offers relief to businesses experiencing a temporary or seasonal decline in income. Providing the owner is able to offer proof of an eminent upturn through projected financial statements, a reprieve of 6 months to 1 year may be granted. This agreement is often a viable alternative to filing a chapter 11 bankruptcy.
In contrast, an SBA Offer in Compromise applies to businesses with no hope of financial recovery. Those responsible must be unable to repay the full amount owed, and a reasonable settlement amount must be proposed. The business owner has the opportunity to liquidate any assets in an attempt to cover as much of the amount owed as possible. Anyone pursuing this type of agreement faces the probability of being subject to a tax offset program, which will further minimize the deficient balance.
Much like a loan modification for homeowners who find themselves underwater, an SBA Loan Modification is an adjustment of a current loan, payments and interest. This route is available for businesses still in operation and thriving but whose building value has depreciated. Such an agreement will benefit those responsible for the loan by lowering payments and interest; in turn, this will decrease the risk of the debtors being forced to default on their loan, which benefits lenders as well.
The company spokesperson concluded, "Obviously, these options are only available under certain circumstances, and strict eligibility guidelines must be met. It is never advisable to attempt entering into any of these agreements without experienced counsel and representation. If qualified, these arrangements can help avoid bankruptcy or defaulting as well as the aggressive collection measures lenders tend to take."
About Protect Law Group
Protect Law Group is a national boutique firm specializing in federal agency matters before the SBA, the SBA Office of Hearings and Appeals, the Department of the Treasury and the Bureau of Fiscal Service. Their battle-tested attorneys and counsel serve on nationwide panels representing individuals and small businesses in trouble with government agencies.