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Business Debt/SBA loan and possible foreclosure?

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Expert: - 1/10/2009


Question
My husband took out an SBA loan in 1/08 to open a new business, which they secured with a mortgage on our primary residence.  He became delinquent and is now in default and the bank refuses to reinstate the loan even though he is now able to make the monthly payments and catch up.  The business is still open.  The bank is threatening foreclosure, even though there is no equity in our home (they're in 3rd position) and we're not delinquent on our traditional 1st and 2nd mtgs.  They wouldn't get any money if they did foreclose.
If he decided to close the business, would the lender first liquidate his assets in the business, and then tell us how much is left that we could possibly payoff without their foreclosing?  Or would they liquidate the bus. assets at the same time as initiating foreclosure?  I'm just hoping they would liquidate the bus. assets first, then tell us what's left we owe and see if we can do a compromise or pay the remaining balance without being foreclosed on.

Answer
Amanda:
Thank you for your inquiry. I do not know the collection procedures of SBA, but based on my experience I don't think their threats should be taken lightly. I highly suggest that you immediately go back to a supervisor or manager of your lender that initiated your loan with SBA and provide them with a current P&L, and financials that will prove to them that you can service this loan going forward. You need to make the case that it clearly would not behoove them to foreclose. Unfortunately, the SBA seems quite automated in its process and unless you get with an advocate through the lender or your local SBA office to provide some intervention on your file or options this may be difficult to cure. You can also offer to place your business assets as collateral to further secure their position. You can find a local office by visiting www.sba.gov. If you can't negotiate a resolution with them, you may need to consult with an attorney to advise you of your options.

Respectfully,

Christine Janklow

Business Debt

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Christine Janklow

Expertise

As President of SettleSource,Inc. a business debt settlement firm, I invite you to inquire about all aspects of business debt solutions to best determine which may be most appropriate. If you have questions such as: What is debt settlement and how process provide debt relief to my business? What options are available to deal with my business debts? Is it possible for a business owner to negotiate their own settlements? Why is debt settlement preferable to filing a bankruptcy or debt consolidation? Why are creditors willing to provide settlements to a business? How will settling debts affect credit scores? or How to rebuild a business after debt is eliminated. Please ask it now! For more information regarding how debt settlement can help your business, please visit www.SettleSource.com and place your inquiry. Mention All Experts to have a confidential no cost consultation with Christine. If this is your business situation time may play a very important factor in getting matters resolved proactively before they have negative affects on the business.

Experience

My expertise is specific to providing business solutions that will have profound positive impacts on the financial health of businesses. I have 25 years experience as an entrepreneur and have developed national sales programs; strategic alliances; product development; marketing programs; business and turnaround plans and debt settlement programs all providing methods to improve the financial outlook for large and small businesses. In the area of commercial debt settlement I have over 10 years experience working with large and medium corporations and closely held businesses to enable successful debt reduction and turnaround. I am a professional debt arbitrator and have negotiated with major banking institutions as well as vendors, suppliers and other trade creditors.

Organizations
Provisors;Turnaround Management Association; Los Angeles area

Publications
Accounting Today; Web CPA; National Restauarant Association;Los Angeles Daily News; Today Magazine Monthly series of business articles entitled "Brand News."

Education/Credentials
Bachelor of Business Administration; Associate of Arts Merchandising

Past/Present Clients
American Airlines, American Express, Safeway Inc., New York Life, consumer products manufacturers; retailers, food service industry and other small businesses and service providers.

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