SBA Loan Default
The Small Business Administration (SBA) is a government agency that provides economic support to small businesses and budding entrepreneurs to make them as successful as possible. Part of this support comes in the form of SBA loans made to businesses through private banks, credit unions and other lenders who have partnered with the SBA. This partnership provides government backing for a portion of these loans thereby making lending easier for smaller and less established businesses.
Because an SBA loan is government backed, the consequences of defaulting an SBA loan are different. First, the business credit score will drop due to the missed payment. Also, interest rates on the loan may increase. One of the most severe consequences may be seizure and sale of hard property or security interests that were used to secure the loan. Many SBA loans are backed by some hard asset of value, like a home or other valuable collateral that was included in the lending contract to obtain the loan.
As seen in the link above, when risking default on an SBA loan the SBA suggests consulting a qualified debt negotiation attorney. First, an expert debt negotiation attorney will analyze the SBA contract and collateral associated with the SBA loan to give the business owner a legal opinion of their default situation. A qualified debt negotiation law firm can work to negotiate the debt with the lender on this government backed loan. This could mean a change in payment terms or an offer and compromise on the debt to settle it for less than the balance owed. Starting a business involves risk and defaulting an SBA loan is part of that risk. Consult an expert debt negotiation attorney if you have an SBA loan that may go into default.