Last week my client got some good news: his SBA loan settlement was approved. Hurray! Let’s do a dance! My client was pretty pumped, as to be expected. The SBA officer agreed to the terms, and we were all high on life. Then we got the “approval” letter. My client’s name was spelled wrong. Kinda annoying. The letter also stated that he was to make 200 monthly payments. That wouln’t be such a big deal, unless you consider the fact that the payment term that we all agreed to was 60 months! When we reached out to get these sloppy errors fixed, the workout officer replied, acknowledged the errors, yet implied that we didn’t need an actual copy of the revised approval letter. It was as if he was saying “hey, I know the terms, so you really don’t need more than that”.
It’s always a mystery to me how lenders don’t get it. They don’t understand why it’s important for a borrower to get the terms of a settlement IN WRITING. To me, it’s a simple concept. I always assume that at some point that we will need to prove that the debt was settlement, which of course includes the terms of the settlement. If me and my client were to take their word for it, I can almost guarantee it come back to bite us. And this is why we are insisting that we get a letter that contains the correct settlement terms BEFORE my client remits payment. It baffles me to think that a workout person at the SBA would expect us to send money without having any written evidence of the settlement terms!
The moral of my little story: when someone tells you that you don’t need something in writing, DON’T BELIEVE THEM! I always tell my clients that when it comes to settlements, I am always reminded of a quote from the classis movie A Few Good Men: it doesn’t matter what you know, it only matters what your can prove! And unless it’s in writing, you can’t prove much!