Back when originally took your SBA loan, you had no idea that your business was going to collapse in spectacular fashion. And really, how could you know, since the demise of your business had nothing to do with you, and everything to do with the economy. Since the thought of having to settle never really crossed your mind, you never stopped to wonder how it would all play out if the you-know-what hit the fan. So what’s my point?
My point is that when it comes to SBA Offer In Compromise, who you borrowed from can make all the difference. Since you had know way of know how friendly or unfriendly your lender would be when things fell apart, luck certainly does play a role. If you borrowed from a large SBA lender, chances are they have a big workout department and are willing to make reasonable business decisions. If you borrowed from a smaller bank who doesn’t do a lot of SBA lending, you will likely be required to jump through many more hoops. Who knew?
But wait, there’s more. Here are few other factors that can make or break your settlement:
– The workout officer (for either the bank on the SBA). Some workout people are fair and reasonable. Other got picked on at recess when they were kids, and see their job as a way to get back at the cool kids. (Self-promoting note: I have good relationships with many of the workout officers around the country. If they have worked with me before, they know I encourage fair offers from my clients, and submit thorough and well articulated settlement packages.)
– Where your file is referred to. Not all SBA offices are created equal, and even though they have the same rules on paper, they most definitely do not follow the SBA OIC criteria. Some will only accept lump sums, others will allow monthly payments. Some stick to rigid minimums in terms of the amount they will accept, while others will based it solely on the guarantors ability to pay. Some requires tons of paperwork, others want the bare minimum. (Another self-promoting note: having a guy like me on your side who knows the protocol of each office can save you major headaches, and of course lots of money).
Don’t get me wrong folks. When it comes to SBA loan settlements, your situation absolutely plays a factor, but I thought it would be helpful to make everyone aware that while an OIC is always judged based on your personal financial circumstances, who is evaluating the offer is a factor can be as big a factor as what it says on your personal financial statement. For that reason, it’s extremely important for you to submit an OIC that is as close to perfect as possible.