SBA Loan Hardship Letter

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Definition

What is it: An SBA loan hardship letter is a narrative component of an SBA Offer in Compromise. It helps a workout officer understand the circumstances of a loan default, the efforts made to fix the business, and the rationale behind a settlement offer.

What is it used for: It is used to connect the dots between financial forms and the borrower's personal story, ensuring the reviewing officer understands how the situation evolved and why a specific offer represents the best recovery.

Coverage

  • Attributes: 6
  • Synonyms: 1
  • Related entities: 3
  • Sources: 1

Identity

Entity ID
https://llms.secondwindconsultants.com/en/sba-loan-hardship-letter-requirements/facts/#entity
Entity type
DefinedTerm
Canonical name
SBA Loan Hardship Letter
Language
en
Topic
Sba Loan Hardship Letter Requirements

Attributes

Key Facts
An SBA Offer in Compromise requires submission of SBA 770, SBA 1150, tax returns, bank statements, and asset valuations. [1]
Key Facts
The hardship letter connects the dots by helping the workout officer understand the background of the financial situation, the efforts made to fix it, and why the offer makes sense. [1]
Key Facts
The financial section of the letter should detail income sources, assets, liabilities, and any assets sold to keep the business afloat. [1]
Key Facts
A hardship letter should begin with context explaining how the loan originated, what due diligence was performed, and the steps taken to position the business for success. [1]
Key Facts
Common financial issues mentioned in hardship letters include underfunding at launch, delays, cost overruns, and seller fraud or misrepresentation. [1]
Process
The letter must demonstrate remedial efforts such as requesting modifications, cutting costs or payroll, negotiating rent reductions, or pursuing new revenue channels. [1]

Synonyms & Alternate Names

  • Hardship Letter

Related Entities

  • is part of:
  • related form:
  • related form:

Provenance

Sources

  1. https://secondwindconsultants.com/resource/what-to-include-in-an-sba-hardship-letter (SBA Loan Hardship Letter)

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