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Negotiating SBA Loan Repayments

Dec 15, 2016
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The U.S. Small Business Administration (“SBA”) is a federal agency that helps entrepreneurs grow their businesses by assisting with access to loans. The SBA guarantees a portion of the loans made by banks so that there is less risk for the bank and more incentive for lending to small businesses and their owners who also personally guarantee the loans.

Unfortunately, if a business fails or defaults on the loan, then the bank or the SBA may still seek to collect the remaining balance due from the business owners.  Given that the debt is ultimately owed to the SBA, a federal agency, the government has special debt collections abilities beyond filing a lawsuit or referring the matter to a collection agency.  For example, even after a business is closed, with no remaining assets to foreclose, the government may still seize personal federal benefits such as tax refunds and social security benefits until the debt is satisfied.

Therefore, it is crucial to work with the SBA and attempt to resolve the debt after a default.  Once the loan has been transferred from the bank to the U.S. Treasury Department, they will begin aggressive collection efforts under the Treasury Offset Program. At this point, a lump sum payment, payment plan or workout may be viable options, depending on the personal assets and liabilities of the debtor. As many are not aware, the government debt may also be dischargeable in bankruptcy, but that is usually a last resort.  An experienced litigation attorney can help navigate the debt settlement process and counsel on other issues that may arise, such as personal income tax liability resulting from a loan repayment settlement.

For assistance with these matters, please contact a member of our Litigation practice. 


This publication is intended as an information source for clients, prospective clients, and colleagues and constitutes attorney advertising. The content should not be considered legal advice and readers should not act upon information in this publication without individualized professional counsel.

About MCCM

McConville Considine Cooman & Morin, P.C. is a full service law firm based in Rochester, New York, providing high quality legal services to businesses and individuals since 1979.  With over a dozen attorneys and a full paralegal support staff, the firm is well-positioned to right-size services tailored to each client. We are large enough to provide expertise in a broad range of practice areas, yet small enough to devote prompt, personal attention to our clients.

We represent a diverse range of clients located throughout New York State and New England.  They include individuals, numerous manufacturing and service industry businesses, local governments, and health care professionals, provider groups, facilities and associations. We also serve as local counsel to out-of-state clients and their attorneys who have litigation pending in Western New York courts.  For more information, please contact us at 585.546.2500.