The Small Business Administration (SBA) funded over a trillion dollars in SBA loans during the pandemic. The SBA has now taken action to pursue every legal and cost-effective method to collect on these loans and to help small business borrowers in default come into compliance by either securing forgiveness or repayment. The SBA is aggressively pursuing those loans deemed fraudulent.
If you have not applied for PPP forgiveness, you are running out of time.
Borrowers have up to 5-years from the origination of the loan to request forgiveness. As of January 2024, the SBA showed that 96% of the total PPP loan portfolio had been forgiven.
If you are struggling to repay your EIDL loan, you need to meet with our firm
You may have several options available including seeking a modification of the payment terms, an offer in compromise to pay a reduced amount, or to eliminate the debt in bankruptcy. Remember, these loans will follow you until you pay or pass away. The SBA has garnished Social Security Benefits for years. So, ignoring the problem will not cure the problem. Taking action provides you with sensible options and relieves you of stress.
For the honest but unfortunate debtor, bankruptcy may be the best option available. If there was no fraud in your application or use of funds, bankruptcy can discharge your SBA loan relieving you of this debt forever.
If you have concerns you did not use the funds properly and you cannot pay them back, then schedule an appointment with me to discuss your options. When a borrower substantially complied with the use of the funds, the success of discharging the SBA loans in bankruptcy is higher.
If the loan was obtained through fraudulent means or funds were used improperly, bankruptcy is not recommended. However, an offer in compromise may be a great option if you are the one proactively seeking to remedy the situation. Do not wait for the SBA to audit you. SBA audits should not be handled without representation of experienced counsel.
Author: Jenny L. Doling, Esq., LLM Taxation
CA State Bar Certified Bankruptcy Specialist
Secretary and Board of Director of NACBA
President of the San Diego Bankruptcy Forum
Serving Bankruptcy Clients throughout California and
Tax Clients Nationally