This may be the most common question I get from potential clients. I always tell people that they can count on the OIC process taking at least 4 to 8 months. If you get a decision from both the bank and SBA in 4 months, that requires everything to go right, without a hiccup. And to be honest, that hardly ever happens. Stuff almost ALWAYS take longer than you expect. The banker takes 3 to 4 days to reply to any email. My client takes a few weeks to gather paperwork. The bank asks questions. Then they ask for more documentation. Then the banker goes on vacation. Then the banks approval committee only meets every other Thursday, and we just missed the deadline to submit for the next meeting. And so on…
So while there are certain things we can’t control, there are a few things you can do to ensure that the process goes as quickly as possible:
- Be Responsive – Be responsive to me, and to the bank. It might seem like a small thing to say “I’ll respond tomorrow” or I’ll call Jason back on Monday”, but if you go back and forth 10 times with the bank with a 2 day lag each time, that adds up to almost 3 weeks.
- Be Accurate – One major reason that SBA Offer In Compromise get held up is that borrowers send me inaccurate or incomplete information. Even when I push back on the client, pleading with them to get me better info, I sometimes find myself submitting an OIC package that is lacking. What ends up happening is that after a month or two, the bank comes back asking for the info that I originally pleaded for, but didn’t get. Being through and accurate the first time through can save tons of time.
With all that said, there are some things you can’t control:
- The speed at which the bank works. Following SBA default, borrowers are often very anxious to get a decision, and are disappointed to learn that the process is not a quick one. My client often wants to go over the banks head to deal directly with the SBA. That won’t work. The SBA pays the bank to service the loan, so as long as the bank is continuing to service the loan, they don’t like to get involved.
- Appraisals – The most valuable remaining asset that most borrowers have is their home. So if that home is pledged as collateral, the bank will need to do an appraisal. I’ve had a fair amount of OICs either fail or go up significantly because the appraisal come back at a much higher value that my client has stated. Despite client protests, once an appraisal says there is more equity in a property than previously thought, it’s hard to convince the bank to come down off that value.
- The speed at which the SBA works. When you think SBA, think of a black hole. Once your SBA Offer-In-Compromise goes it, it doesn’t come out, and no information is available. You get an answer when you get an answer.
As a consultant and former workout officer for the largest SBA lender in the country, I’ve handled SBA loan defaults since 2008. So while I can’t control the speed at which the process goes, I do know when to gently push the bank, and when to back off and let them do their job.