Dear Ms. McMahon,
Congratulations on your new appointment. I will get right to the point of my letter: I believe that SBA is leaving money on the table due to the practice of referring loans the US Treasury before every opportunity is exhausted to collect from delinquent borrowers.
While I understand that the US Treasury operates independent of the SBA, it needs to be explained the collections arm of the Treasury is beyond absurd. Wait times to speak with someone sometimes exceed an hour, none of the agents have email or a direct phone extension (meaning each time a borrower calls they get a different person), and only accept faxes (which in my experience get “lost” at least 50% of the time). The kicker is that they won’t settle for less than 70% to 80% of the loan balance after the Treasury applies 28% fee, meaning they essentially won’t take any amount less than the original balance. While I don’t have access to their metrics, I would have to believe the recovery rate from Treasury-referred loans is quite loan due to their inefficient and ineffective operations. The Treasury will argue that these loans are the oldest, and therefore least collectible. While this may be true to some extent, I am certain that I could do better.
I am not writing to you to simply complain. I have a fairly easy solution: add a “last stop” at the SBA that is authorized to negotiate settlements (this used to be the case at the Treasury Offset area in Birmingham, but changed a few years back) instead of referring files to the Treasury, where I would estimate that 90% of borrowers have absolutely no chance to settle.
In conclusion, I am also willing to put my money where my mouth is, so I would be very interested in assisting with the creation of a “last stop” collections unit, or alternatively, would be interested in working with the SBA as a contractor and oversee my own team to undertake the task of recovering funds from delinquent borrowers.
Founder, Distressed Loan Advisors