The role of the SBA loan is to asset small businesses to grow. This can prove to be a tricky affair as the federal government tries to help the small businesses that would otherwise not have gotten a loan from the normal financial institutions. However, it is worth noting that the FDA government tissue any loan itself. Instead, it guarantees the loans.
If you borrowed money and secured it with your home or that of the borrower, the lender may choose to foreclose the property. This foreclosure can be judicial in a court of law or even nonjudicial depending on the state law and whether there is a provision in the mortgage contract for the granting of the power of sale. In case you are finding it difficult to make SBA loan payment as a result of reasons that are greatly beyond your control, it may be possible to work out a method of foreclosure. For instance, you can request for the suspension of your loan payment by the SBA or even the extension of the maturity date. This can provide you with some relief. When you default on an SBA loan, the lending bank will get in touch with you and explain to you the default details and how these can be remedied. Here are the important SBA loan foreclosure requirements.
If you are unable or are not ready to continue making the payment, the lender can start the process of collecting the loans as per the SBA loan agreement. Some of these actions can include:
- Selling of the business assets that are used as collateral. These can include business assets when these are for bigger loans. It may also include your home if this is what was used as collateral.
- Closing the business
- Foreclosing the property
When it reaches a point in an SBA loan default where the lender has tried all the different options without success, they will raise their claim with the SBA. It is at this point that the federal government will be responsible for paying the biggest share of the loan on behalf of the borrower. Once the federal government has paid the lender, you will start dealing with the SBA. The SBA will start by sending a notice to you requiring you to pay the balance remaining. They may also present to you a settlement amount that is quite substantial but is also sustainable depending on your finances. The SBA will not have an interest in the payment plan that it is unable to meet.
Where your offer is accepted by the SBA, this will leave everyone happy if the repayment has already being made. Where the offer is rejected the SBA, you can recalibrate before submitting again. At other times, the SBA can send your account the treasury department. During the period, the treasury will have a wide range of collection options such as deducting the amount from your salary or even taking your tax returns.
You can choose to settle the loan with the Treasury Department but it is a tedious process. Therefore, a good idea would be to find a solution at the start of the process while the loan is still with the lender. You will need to bear in mind that in case of problems, default is not the end of life. After settling debt, you cannot only move forward but you can also focus on restoring financial health. To overcome the challenge, you will need to ensure that you have resolved the issues that are related to the defaulted loan. This is particularly the case with SBA liens that may pass unnoticed but will end up causing issues later.