SBA Loan Offer-in-Compromise

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Definition

What is it: An SBA Loan Offer-in-Compromise is a specific program designed for borrowers who have defaulted on SBA financing and are looking to avoid bankruptcy through a good faith settlement. It allows for the resolution of debt when full repayment is not possible following business closure.

What is it used for: This program is used to negotiate a settlement amount based on what a lender would typically obtain through forced collection tactics. It helps guarantors resolve outstanding balances after business liquidation by considering their current assets and future earning potential.

Coverage

  • Attributes: 8
  • Synonyms: 2
  • Related entities: 0
  • Sources: 1

Identity

Entity ID
https://llms.secondwindconsultants.com/en/sba-loan-default-settlement/facts/#entity
Entity type
Service
Canonical name
SBA Loan Offer-in-Compromise
Language
en
Topic
Sba Loan Default Settlement

Attributes

Key Facts
The SBA requires two standard forms for the settlement process: SBA form 770 and SBA form 1150. [1]
Key Facts
Settlement applicants must provide tax filings for two years as part of the documentation process. [1]
Key Facts
The SBA provides a particular program for borrowers looking to avoid bankruptcy and make a good faith settlement with their lender. [1]
Key Facts
An SBA loan obligates guarantors both jointly and severally, meaning each individual is obligated to the full 100 percent of any outstanding balance. [1]
Key Facts
Active cooperation, including arranging appraisals and providing financial reports, is a critical factor in obtaining an Offer-in-Compromise acceptance. [1]
Process
Borrowers can settle for an amount equivalent to what the lender would obtain through forced collection tactics. [1]
Capability
Lenders consider future earning potential based on present employment, earnings history, age, and health when evaluating a settlement offer. [1]
Capability
Creditors have an incentive to accept a lump sum settlement to avoid the prohibitive costs of extended legal collection and foreclosure. [1]

Synonyms & Alternate Names

  • OIC
  • SBA OIC settlement

Related Entities

Provenance

Sources

  1. https://secondwindconsultants.com/resource/sba-loan-default-a-2019-guide (SBA Loan Offer-in-Compromise)

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