SBA Loan Default – More Common Questions

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Why won't my banker return my calls?

There are a few possible reasons why your phone isn't ringing:

1)      Your bank is understaffed.  If you are just 1 of 200 loans that your workout officer is responsible for, it's simply a numbers game.  When there is literally not enough time in the day to handle all the phone calls, emails, projects and meetings, prompt attention is out the window.

2)      Your banker is incompetent.  Let's face it: No matter what profession you are talking about, there are a certain number of people who will be terrible at their job.

3)      You did something to make them mad.  Did you promise to make a payment, and then flaked out and didn't send it?  Did you make a major change to the business without telling them?  Were you rude or abusive when you last spoke with them?

4)      Your file has been referred directly to the SBA.  I often hear from people who were waiting for the bank to call them back, and all of a sudden 6 months later, they get a letter directly from the SBA.

If the loan is 75% guaranteed by the SBA, don't I only owe them 25% of the loan balance?

Sorry, the SBA guaranty is for the bank only.  The idea behind the SBA guaranty is to compel lenders to lend to borrowers who they would otherwise have to decline.  Whether or not the SBA reimburses the bank has no bearing on how much you owe.  All that really changes is that the SBA will get 75 cents of every dollar that is collected on that loan going forward.

I have a business partner, and we both personally guaranteed the debt.  Am I only liable for 50% of the debt?

In most cases, all personal guarantors sign unlimited personal guarantees.  This means that you are both responsible for 100% of the debt.  Therefore, they will pursue both of you for the full amount. 

I personally guaranteed the loan as a favor to a friend/family member, but I had nothing to do with the business.  Shouldn't that count for something when they are considering my Offer In Compromise?

No.  The reason they asked for your personal guarantee in the first place was because the business and business owners did not qualify for the loan by themselves.  The whole idea was to have a guarantor who has resources available to repay the debt in a worst case scenario.  A personal guarantee is a personal guarantee regardless of why you agreed to it at loan origination.

When I first took this loan, I pledged my home as collateral.  My lender said the bank would release the lien after 12 months of on-time payments, but now they won't.  What gives?

It's important to realize who made that promise to you: a sales person.  Their job is to bring in loans.  Unfortunately, some sales people will tell you things with a wink and a nod that they have no authority to promise.  Unless you have it in writing from the bank that your home will be release at a certain point in time, you will be out of luck.
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