SBA loan programs are designed to provide easier access to funding for small businesses. However, when a downturn hits, you may find yourself regretting ever filing for the loan in the first place. Struggling with SBA loan repayments can feel crippling — to your business and personal life.
Burying your head in the sand is not the answer. Finding a viable solution as quickly as possible is the answer, and it’s going to leave you and your business in a better position going into the future.
As SBA loan advisors, we’re experts at providing SBA loan default help. You see, we understand that the first steps can be the hardest part of the SBA loan default process. Going from zero to one means reevaluating your circumstances and acting fast. That’s why we’ve put together these 5 invaluable actions you can do today to get on top of your SBA loan repayments.
Get Professional Advice
If you had a broken arm, you wouldn’t try to fix it yourself, because you’re not a professional. Of course, you’d go to a doctor who is a specialist in the subject.
It’s the same with finances. As financial guru, Ramit Sethi, often notes — the stories we tell ourselves about finance are a cacophony of melded ideas we’ve heard from our upbringing and circle of peers. These people aren’t professionally trained in finance, let alone the complicated SBA loan default process.
While the advice and wisdom of family and friends can be poignant and well-intentioned, they may not be 100% accurate. The SBA loan default process is very unique in comparison to other loan default processes. While you may have a family member who has negotiated a credit card debt before or repaid a student loan, the process of missing repayments on an SBA loan is very different.
Misinformation can be one of the main causes of rejection in SBA loan offer in compromise cases. When people try to complete the complex procedure themselves following a patchwork of ‘somewhat correct’ advice, they tend to collect the wrong data, fall foul to clerical errors, and submit incorrect paperwork. These are surefire ways to increase your SBA loan repayment problems.
A professional SBA loan expert not only understands the SBA loan default process like the back of their hand, but they also have a plethora of experiences from which they can draw similarities to your case. Hiring an experienced, qualified SBA loan advisor can protect you against rookie errors such as this, while also helping mediate a tenable plan to ensure you can cope with SBA loan repayments.
Despite common misconceptions, you don’t need to splash out on a costly SBA loan default attorney — especially not at the early stage of SBA loan default. While they are experts at their job, SBA loan default attorneys are reserved for severe and later-stage cases.
Reach out to us. As your SBA default loan advisor, we’ll work with you to create a tailor-made solution to approach your specific business case — while drawing on the catalog of experience of our accomplished team.
Get Honest About Spending
Whatever course of action proceeds, repaying your SBA loan should be at the forefront of your mind. This is going to mean reconfiguring your spending in order to cut back costs to make SBA loan repayments a priority.
At first, this may seem impossible. You may feel that you’re already operating on threadbare expenses. However what you feel and what is actually happening may be incongruent. It’s important that you look for your outgoing costs and leverage those downward. To do this, you need to have a keen eye on your spending.
The funds created by cutting back on spending can be rediverted to paying your SBA loan. Finding small pocket-sized solutions to cut out costs is easy once you’ve documented them all. Dedicate a portion of today to looking at your outgoings over the last few months, from source to sale. Check out your accounts and cash spending and make sure to be honest — if you had an extra glass of wine each Friday team meeting, write it down!
Next, you need to break this down to understand where the money is going: resources/training/stock/logistics/delivery/customer service/etc. Ask yourself where, how, what, and how much are you sourcing and where, how, what, and how much are you selling or delivering.
These pointers should give you a clue as to where you can cutback. Perhaps you’re not selling any vegan products in your bakery, so you can cut out this supplier — you can always bring them back later if you have extra profit to run promotions and expand. Perhaps you only sell sandwiches at lunchtime and not dinner, so you let your evening staff go and close earlier.
These are very tough decisions to make, but getting started on them today will show you where you can cut back with little emotional impact, and where might take more work. Here are some thoughts to consider:
- Imagine you change suppliers and save by getting a better deal
- Can you create savings by going eco? – Reduce paper/packaging/straws/energy/printing use etc
- How about pivoting your range of clothing by reducing stock levels and upping prices
- Open later and shut earlier to drive down staff costs and building overheads
- Take your service online to cut out office costs
- Do you need to get a first-class train to that meeting or could it be done on Skype?
- Where can you cut back costs by having customers return packaging to use again?
Call Your Lender Today
Oh no, the boogie man.
As SBA loan default experts, we know the fear you feel when you need to call your lender. The problem is that we’re taught to think about money as bad.
Whenever money crosses our minds, it’s usually because we owe some or need some or have a problem with using it, losing it, or storing it. This negative black cloud that hangs over money makes it such a hard topic to talk about. So then, why would we want to freely throw ourselves under the bus by calling our lender, when we can bury our heads and hope it goes away.
It doesn’t go away. You know that, and so do we. That’s why as highly experienced professional SBA loan advisors, we tell all our clients to contact their lender first. Whatever you were going to do today, put that on the back burner and call your lender.
When you don’t contact your lender, you just incur fees and face potential legal problems. These possible ramifications of debt – legal action, aggressive collections, harassing phone calls – these threats are the very reason we cower away from picking up the phone.
However, you’ll never remedy the SBA loan default process if you don’t call your lender. Look, the lender wants their money back — you defaulting is a pain in their beehive. When you don’t pay, they’re penniless. When they’re penniless, they charge you for it.
This spiral can be avoided by being open and honest with your lender. When we say open and honest, we mean calling them and explaining the hurdles you’re having with putting SBA loan repayments in place. This opens the doors to remedial conversations about how to restructure payments to become more manageable.
If you’re a little further down the line, you may even discuss the possibility of SBA loan offer in compromise agreements.
Either way, a 20-minute phone call to your bank or lender today can take the weight off your shoulders. Together you and the lender can work as a team to design a structure that works to benefit you both — they get their money and you don’t feel harried.
Your SBA loan may not be your only debt. You may have a few bills under your wing that you need to take care of in one go. Perhaps you have a credit card bill and overdraft fees to also pay off alongside your SBA loan. If that’s the case, it’s important to consider the correct order to pay back these loans if you can’t afford to pay them all.
As a rule of thumb, any lenders that have UCC-1 blanket lien on your assets should be the first priority when it comes to payback.
What is a ‘Blanket Lien’?
This is the claim staked by a lender over your business’s assets. When to take out a loan, this blanket lien basically says that a lender can take your business assets to repay SBA loans on which you’re defaulting. In other words, if you’re not repaying loans of this type, these lenders can seize your assets.
If you have more than one loan of this type, you should prioritize them chronologically, dealing with the oldest one first.
Any unsecured loans, such as credit card debts, come afterward.
Turn to Your Tribe
When you can’t repay a secured loan such as the SBA loan scheme, you’ll be putting your collateral and assets at risk. If you default for an extended period, you may find the lender seizes your collateral, which could be your business assets, property, and stock – or in some cases, courts can rule for the lender to seize financial assets from other bank accounts.
If you still don’t pay, you lender can start to look at your personal assets as a way of paying these debts off.
If you find yourself in this position, it’s not only very worrying but can be embarrassing. Debt has such as stigma that despite most people being in it some way or another, they won’t talk about it. The shameful guilty feeling of being in debt can be the very thing that bites the hand that feeds us – stopping us from asking for help.
It’s best to nip this problem in the bud if it occurs. Turning to your loved ones is one way to help ‘bankroll’ your business. If you’re struggling with SBA loan repayments, there’s no shame in asking for help from your friends and family – whether than be with business custom or funds.
This idea can be extended even further to look at concepts like crowdfunding. For those panicking about this months SBA loan repayment, consider joining websites like Go Fund Me, Crowdfunding, and Indigogo as platforms that can help you raise money through your fanbase. You’ll be surprised who pitches in!
The Long and Short of It…
The SBA loan default process can definitely be a little scary. Tempted to hide under our beds from the terrifying debt monster, it can be easy to neglect your SBA loan repayment altogether and avoid your lenders at all costs. This may buy you a little time but will cost you in the long-run. The fear you feel when you think to abOut debt collectors and the legal backlash will only heighten if you continue to ignore your duty to deal with your SBA loan repayments.
Fortunately, as SBA loan expert advisors, we’re able to springboard you to take the first few steps into dealing with your SBA debt. Rather than procrastinating any further, you need to start taking action now.
Calling an advisor will get you SBA loan default help today. Leveraging our team’s mountain of experience in SBA loan default help, we assist small businesses like yours to turn their debt situations around. With in-depth knowledge of the classic cases, specific scripts, and actionable steps forward, having an advisor on your side can really help to iron out the SBA loan default process and get you and your business on the straight and narrow.
Once you’re open and honest about your spending, you can start cutting back costs and discussing restructuring repayments with your lender. Get down a diary of your spending today and pick up the phone to your lender.
Armed with the information on where you can cut costs and redivert funds, you should be able to start the cogs turning to form a better structure for SBA loan repayment within 20-30 minutes! Help from an SBA loan advisor will, of course, make this conversation easier!
With a little weight off your mind, you can now consider how to boost your funds to keep to the new loan structure by encouraging sales, adding in promotions, asking friends and family, and considering crowdfunding.
Remember! It is imperative to prioritize your debts. SBA loan lenders have UCC Blanket lien on your business assets, so it’s integral to deal with this debt before other less pressing fiscal commitments.