Most of my article about SBA loan defaults, SBA Offer In Compromise, yadda, yadda, yadda are mostly about the technical aspects of the settling an SBA loan. Today, I want to address the emotional side. That’s right, I want to talk about the range of emotions that client’s often experience as the move through the process.
- Panic and Confusion – Before you business closes, there are signs that things aren’t going right. And you start to worry. You realize that making loan payments for 10 years is about as likely as winning the lottery. So you start doing some investigating, Googling things like “what happens if I can’t pay my SBA loan”, “SBA loan foreclosure”, and “SBA attorney”. You find about half a dozen sites, including mine, spouting the virtues of settlement. Some make dubious claims, others say they use “sophisticated strategies”, but all in all you pick up a few tidbits, but still not enough to fully understand your options. Can I settle? How much can I settle for? Will the bank foreclose on my home? Will the bank let me just pay my half, and go after my partner for his half? How will they view my situation? Can they take money out of my bank account? You read as much as you can (kudos to you if you read all my articles!), but you peer up at the clock and it’s midnight. You sit there in front of your computer, tired, panicked, and confused.
- Mild Depression – Your business has closed. You feel defeated. They auctioned off all your equipment for pennies on the dollar, and as a final kick to the stomach, your banker wanted to know how you plan to pay back the loan. You call a guy like me to understand your options. The more you hear, the more you realize that there are no good options here, only degrees of bad. On top of losing your investment in the business, now the bank is breathing down your neck. To make matters worse, you pledged your house as collateral. At your age, you never imagined you would be where you are right now. Bank accounts going in te wrong direction, retirement funds gone, house in jeopardy, and facing the prospect of working until your 100th birthday just to get back to where you were 5 years ago.
- Anxiety – You retain the person you think is most qualified (hint, hint) to get the job done, and you work together to get the required paperwork together. The SBA OIC gets submitted to your lender. Days, weeks, and months go by with no feedback of any kind. Your financial fate rests in the hands of people whose job, it seems, is to give you the financial equivalent of prostate exam. You worry about what will happen if your SBA Offer In Compromise is rejected. You worry what will happen if they want more than you can afford. You even kinda worry about writing them a huge check if they actually do accept your offer.
The goal of this article is not to scare you, but rather let you know that if you are feeling the emotional weight of your SBA loan default, please know that you are not alone. Losing a business is traumatic, as is losing large sums of money, while still owing more. As I said earlier, there are usually no good options. The best case scenario is that the banks lets you pay them even more money on top of what you’ve already lost. While it’s not what you hoped for, I can tell you that many of my clients have relayed one additional feeling once I’ve successfully settlement my debt: relief.