The SBA was created in 1953 and has offered small businesses loans at reasonable rates to help small businesses deal with natural disasters and in other narrow circumstances. The number and availability of SBA loans increased dramatically with the COVID-19 pandemic.
The SBA offered PPP, EIDL, and other types of loans to businesses in the wake of the pandemic. We will focus primarily on the PPP and EIDL loans.
Given the difficult economic situation we are facing today many businesses have closed or are closing. Many companies and owners cannot afford to continue to pay the SBA loans and maintain profitability. As a result loan defaults of SBA loans are happening at record levels and SBA BORROWERS NEED HELP.
The original loan terms were very generous, fixed low interest rates and up to 30 years to pay off balances. Some loans like PPP loans could have been forgiven if specific criteria were met.
Keep the loan and pay off the balance while it is still with the SBA.
If option one is not possible the loan will default. If the loan defaults it will be sent to the Bureau of Fiscal Services (BFS) who will attempt to collect the debt using traditional collection actions such as bank levies, wage garnishments and liens.
Dealing with SBA loans is very important if your business is struggling or has closed or might close. You can either save your business by handling any potential default well or greatly reduce a very large debt. It is important to get talk to an experienced Tax Professional to discuss your rights and options and how to get peace of mind.