Running a business can be tough – it doesn’t always work out the way we planned. This can leave us worrying about paying back those pesky business loans. This guide is crafted to help anyone who ...
\r\nHas defaulted on an SBA loan
\r\nIs considering settling on an SBA loan
\r\nIs concerned about SBA loans and bankruptcy
\r\nPersonally guarantees an SBA loan
\r\nIs conducting research before taking out an SBA loan
\r\nI’m Jason Milleisen, the founder of Distressed Loan Advisors. As an SBA default expert, I use my wealth of professional experience to negotiate settlements. Thanks to my stint as a workout officer for the largest SBA in the U.S., followed by the past 10 years of working directly with borrowers as a consultant, I've learned a lot I can share.
\r\nIf you're looking to cross a bridge (or perhaps a gauntlet would be more appropriate), you have to start somewhere. This means taking that crucial first step of admitting to yourself that failure (and the resulting default) is a real possibility. Where do you get started when you’ve defaulted on your SBA loan? How do you get from zero to one?
\r\n\r\nWhile it may be emotional to have your SBA loan hanging over you, consider your options wisely. Before the SBA will even sniff at a settlement, they need to know you've already done everything in your power to pay off your loan in full.
\r\nYour loan is likely secured by your business assets. If the collective value of these business assets will cover the loan, you'll need to sell them to repay the full amount. If you’re lucky, you might not have to sell everything, and your business can still continue to operate on bare-bones resources. The reality is that, in most situations, the business folds.
\r\nIn the vast majority of situations, selling the business assets won't cover the full loan. You'll need to close your business as well as selling off the assets.
\r\nIn both cases, you’ll need to contact your bank before selling anything to get written approval to sell the assets. If you skip this crucial step, it could be disastrous. Your lender has a lien on all the business assets, and they won’t be willing to release them if you sell the assets for less than the bank values them at.
\r\nWhile you may be struggling to pay your SBA loan back, that doesn’t automatically mean you get approved for settlement. In fact, a huge number of Offers in Compromise are rejected. This can be for several reasons, so making sure you’re eligible will save you a lot of time. To be eligible for an SBA loan settlement ...
\r\nYou must cease business operations and inform your bank of this.
\r\nYou must liquidate all assets – if these cover the full amount of the loan, you aren't eligible.
\r\nYou must provide full financial disclosure with your OIC – they won't negotiate blind.
\r\nYour offer must exceed your collateral – even if this is your home. Simply offering the SBA the value of the collateral isn’t enough.
\r\nAlso known as an OIC, an Offer in Compromise is a proposal sent by the borrower to settle the debt at a reduced amount. To support this proposed settlement offer, you'll need to provide full disclosure on your personal finances (some banks require business financials, although the SBA doesn't typically require them).
\r\nThis settlement offer is first sent to your lender, who will recommend it to the SBA if they deem the offer to be acceptable. Then, it's up to the SBA to approve or reject your proposal. Either way, both your lender and the SBA have to agree to your terms for the settlement (unless the file has been referred to the SBA, in which case it only needs SBA approval).
\r\nHaving worked with many different clients, I've negotiated deals for all kinds of situations. Mostly, the same issues arise across the board, causing the settlement process to slow down or the proposal to be rejected. Here's how to address these pain points to set you on the right track from the start.
\r\nCan’t make ends meet? Struggling to pay off debts? Scared they'll come for your business and home? Sticking your head in the sand won't help.
\r\nIf you want to get out of the rut you’re stuck in, you need to take the necessary steps forward. Ignoring bank phone calls or ignoring lenders' letters won't stop them from coming. You're better off calling the bank directly to ask how you can cooperate, otherwise you’re inviting litigation. Having a lender who feels like you've handled the situation openly and honestly could generate a nudge toward a \"yes\" when the lender is on the fence about your OIC.
\r\nIf you want to settle, you need to balance the SBA's requirements, with the reality of your personal finances. Lenders are typically interested in the low hanging fruit: this means funds sitting in a checking or investment account, or in real estate (especially any pledged real estate), so it's important to consider how, where and when you'll be able to raise any capital you plan to include in your offer.
\r\nArm yourself with enough information to understand the process, and specifically what order each step goes in. It’s a good idea to lay out a plan for yourself. Consider how you’ll close your business. How and where will you sell your assets? What other avenues do you have for funding (such as family and friends) if you lack the assets or income to fund the loan yourself?
\r\nBefore selling any business assets to drum up cash to settle your loan, you must ask for permission from your lender. While this may seem to slow down the process, banks and lenders don't like the idea of you selling their collateral without their knowledge. They want to know how much you are selling it for (to ensure you didn't give it away), and want to ensure that every single penny goes in their pocket, not yours.
\r\nA common point of confusion around the liquidation of business assets is getting \"credit\" for the sale. Proceeds from the sale of business assets must be applied to the principal balance of your loan. The proceeds cannot be used to fund your settlement. Any funds that are going to fund your OIC must come from personal reserves. Business assets (including cash in the business account) are part of the collateral package.
\r\nTo get your offer taken seriously, you need to show them what you've got (i.e. full disclosure), and that you've done everything to gather as much as possible. Defaulting on an SBA loan and subsequently pursuing an OIC is much like an invasive medical procedure. Stressful? Yes. Uncomfortable? Very. Necessary for a positive outcome? You betcha.
\r\nDon’t have enough in your own piggy bank? Try turning to friends and family to borrow capital. Look to refinancing your house, taking on extra credit cards or dipping into an overdraft. While these suggestions are far from ideal, neither is dealing with the Treasury after they add a 28% penalty to your loan balance.
\r\nThe SBA Offer In Compromise (OIC) process requires full disclosure. This means being completely honest about the funds and assets that you have. If you’re not, and the SBA or your lender finds out you have hidden assets (there are several ways), your offer will be rejected. Here’s a quick rundown of what needs to be included:
\r\nEasy access to cash in the bank – both you and your spouse
\r\nMoney in yours and your spouse' savings accounts, money market accounts and Certificate of Deposits
\r\nRetirement funds for both you and your spouse – IRA, 401(k) and other types of retirement account
\r\nAccounts and notes receivable – this is the sum of any loan you've personally funded in the past year
\r\nLife insurance policies (cash surrender value is a common target)
\r\nReal estate owned by you or your spouse, both commercial and residential
\r\nValuable personal property – home, gold, gemstones, antiques, artwork, valuable collections, pricey electronics, expensive furniture. They don’t want your couch or your 1981 Toyota, but if you are living an extravagant lifestyle with expensive possessions (like a luxury boat), be prepared to part with them.
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\r\n\r\nThere are three ways to liquidate assets from your business. The method you pick may rely on your industry contacts, the time you have, and the value tied up. Consider these three options and pick a plan of action that suits you:
\r\nLike selling a used car, it's possible to sell your business as a whole, with the idea that the buyer might carry on trading. The idea behind this is that there is greater value in the business as a complete entity than in the parts separately.
\r\nUnlike selling a used car, however, your business currently doesn't work. That means that when you're scoping out a buyer for your business as a 'Going Concern,' you’ll likely be selling the business for less than what you owe. It’s basically like a short sale on a house.
\r\nIf nobody wants to take over your downtrodden business, you need to look at selling off the individual parts of the system. Look at the valuable assets within the company, such as industrial equipment, real estate, vehicles and high-tech electronics.
\r\nConsider using eBay, Facebook Marketplace, or Amazon for smaller items like laptops and tablets, costly tradesmen’s fittings, high-value clothing stock and so on. There are also auction companies that will handle everything, but it usually comes at a fairly high price.
\r\nThis is usually the last resort, only to be used if you have no other options. The problem with having the bank sell your possessions is that they’re not likely to push for the highest price. They take what they can get. In these situations, they typically value the speed of the sale over getting top dollar. [Need help with tax debt? Check out our reviews and best picks of tax debt relief providers.]
\r\nIf you’ve sold off all your assets and you still can’t pay back your loan, you need to move into phase 2 – submitting an Offer in Compromise package to your lender.
\r\nThe first stage of this is to speak directly with your lender to see if they'll accept an Offer in Compromise. There's no point pouring time into the process if there’s no chance they’ll entertain it. Most banks will say yes, but occasionally I come across situations where lenders, for one reason or another, won’t consider an OIC once a borrower has gone into default.
\r\nBear in mind that there is a myriad of reasons why your lender may reject your request for an Offer in Compromise on your SBA loan. Here are some typical ones:
\r\nYour loan is already fully secured with collateral. In this sense, the lender knows they can receive the full amount by selling your collateral, so why would they accept a lower offer?
\r\nYour income is high enough to pay the loan off in full within a reasonable period
\r\nYour collateral, combined with your guarantor’s assets will cover the loan
\r\nYour income, combined with your guarantor’s income will cover the loan in a reasonable period
\r\nYou did something wrong in the process, like selling off assets without getting permission from the lender first.
\r\nTo set the wheels into motion, you’ll need to submit a catalog of forms and personal financial information. This must all be accurate and truthful or you run the risk of rejection. First, you need to fill out these five forms:
\r\nThe last two forms, the 770 and 1150, are especially vital to this process. The SBA Form 770 is for you to make full, accurate disclosure of your assets. Don't try to hide anything or transfer assets; they ask about everything and they will find out, and you'll be subject to enforced collection.
\r\nThe SBA Form 1150 is a chance to give your side of the story. This is your moment to show your real assets and income and why this won’t cut it. To nail this form, get in the lender's shoes and look back at yourself; have you considered all the avenues to assets that the lender will consider? This form is to prove that you’ve tried to squeeze every bit of blood from the stone, yet it still won't cover the full loan.
\r\nYou'll also need tax documentation:
\r\nPrevious 2 years’ of personal tax returns (the year prior if last years aren’t ready)
\r\nIf last year's tax returns aren't ready, you’ll need to provide proof of income for last year – such as self-employed P/L sheets and your balance sheet and pay stubs for employees
\r\nProof of income for this year (pay stubs are sufficient)
\r\nIf everything goes smoothly, you'll have an answer in 4 to 8 months. To speed this process up, try to be as responsive as you can, replying promptly to email and phone calls with any information needed. While you may have airdropped an encyclopedia-worth of paperwork with your application, your lender and SBA will likely need more information later. You may be sure you get it to them promptly to prevent bottlenecking (or having it put on the back burner) your application. Clerical errors are one of the biggest hold-ups for financial entities. Take the time to double and triple-check everything you submit.
\r\nThere is no standardized procedure between lenders. Delays can be caused by internal hold-ups in the bank, such as short staffing or the need for third-party verification of documentation. The same goes for different branches of the SBA – some are more efficient than others and therefore operate more quickly. Both of these scenarios are out of your control.
\r\nAppraisers slow down the process as lenders need to confirm valuations on your assets. If there are discrepancies between your valuations and that of an appraiser, you may see the process drop down a gear as lenders and the SBA seeks to verify this.
\r\nWhile you don’t want to badger anyone, you want to keep your finger on the pulse of the process. Don't hound your lender immediately – wait a couple of weeks before initiating follow-up. Not sure what to say, try this script:
\r\n\"Hello. I have submitted an 'Offer in Compromise' and I was wondering if anyone had had a chance to review it yet. Is there any more information that you need from me, which would help to ease the process? Have you any idea what the bottlenecks are, and if I can be of any help in speeding things up?\"
\r\nJust because you’ve been accepted, doesn’t mean you can sit back and put your feet up.
\r\nJust because your lender has approved your OIC, doesn't mean you're off scot-free. You need to have approval from both your lender and the SBA before your settlement is fully accepted.
\r\nVerbal conversation isn't enough. Always, always, always get your settlement agreement in writing. Bear in mind that there’s no standardized procedure for this. Some banks may send you a letter from their attorney, others may drop you a note on headed paper. The SBA likes to keep it casual, sending nothing more than an email.
\r\nSettlement agreements are often legally binding agreements. If there’s a fault in the paperwork or a clause you can’t adhere to, this may cause legal problems later. Having an attorney verify the papers are valid and accurately reflect the settlement terms can save you a headache later and give you peace of mind now.
\r\nGetting a settlement on your SBA loan is only the first hurdle. You’ll now need to work out how you’re going to honor the terms of the settlement. If you default at this stage, there could be legal repercussions that could result in drastic consequences like foreclosure, bank levy, or wage garnishment.
\r\nMaking monthly installments? Automate your payments if possible. Budget wisely to make do without this money and find side hustles to fill in the gaps.
\r\nDon’t feel disheartened if your Offer in Compromise was rejected. Rejections happen, but it doesn’t necessarily mean game over. If you’ve been rejected, get up, shake off the dust and go at it again. It’s wise to use your first try as a learning experience. The easiest route to pinpointing your downfall would be to simply ask. Give your lender a call and ask to speak about your recent application. Try using wording a little like this:
\r\n\"Hi. I recently had an Offer in Compromise rejected. Please, could you help me to identify where I went wrong? I thought my offer was representative and realistic, however, your team doesn’t agree. I’d love some insights on where we differ in opinion, and how I could improve my offer to meet your expectations.\"
\r\nBe aware that sometimes, if you're rejected by the SBA, they may send your debt to the U.S. Treasury for collection (settlements are hard to come by once that happens), so this is not the time to throw in the towel. It’s time to persist and see this thing through.
\r\nWhile no two cases are the same, as a consultant specializing in SBA default and forgiveness, I do get the same questions more than once. Below is a collection of those questions, and the answers.
\r\nA: SBA settlements are not a foregone conclusion. Deals of this kind are saved for cases where the lender really sees no other way to recuperate the full amount and the borrower can offer good reasons why they can’t honestly pay it back in full.
\r\nDespite how difficult it is, settlements are possible – especially if it's clear to the lender and the SBA that a settlement is going to result in their best recovery.
\r\nA: While, yes, it is humanly possible that you could get your answer within 4 months, that’s hardly ever the case. I certainly wouldn’t bet my last dime on it. The average wait time is around 4 to 8 months, but this only happens if there are absolutely no hiccups along the way.
\r\nBe prepared for this to take longer than expected. I’ve seen my fair share of hold-ups over my time. As each lender is different, so is each SBA branch. While office policies differ throughout regional locations, as do the staff in each company. This means different wait times for each.
\r\nEqually, you may have to enter a negotiation where you’re posed with counteroffers. This back and forth takes time.
\r\nAsk yourself what is within your control that can speed up the process. Make sure all your documentation is correct and complete and submitted on time. Ensure that you’re responsive with all parties concerned and promptly provide any extra details needed.
\r\nA: As a general rule of thumb, you’ll go through your lender unless you’ve heard directly from the SBA or the Treasury. Once the lender gets to the point where they realize they can’t squeeze one more cent from you, they close the file and refer you over to the SBA. Lenders really don’t like it if you try to go over their heads by going directly to the SBA without talking with them first.
\r\nIn less common circumstances, you might get a letter directly from the SBA. Often called a 60-day letter, this is a pretty good indication that your lender isn’t involved in the process any longer. In that case, you're dealing directly with the SBA, so talk to them first. They may send you back to the lender anyway, but that’s just life!
\r\nA: This means that the loan has been \"charged off.\" The SBA is now giving you 60 days to work out repayment terms or submit an Offer In Compromise.
\r\nA: The signing of the personal guarantee is what makes you liable. Never ignore a 60-day letter addressed to you personally, sign it’s a sign that you are likely personally liable. If you receive a letter of this nature addressed to you personally, you need to deal with it immediately. Don’t leave it until the last minute – the consequences are tragic if you can’t pay. 60 days is a hard deadline.
\r\nA: While the silence might be a relaxing breather for you, it doesn’t mean the bank has forgotten about you. Often it means they’ve passed you over and therefore have no need to hound you anymore. Instead, you’ll sit in the backlog of the SBA or Treasury until someone comes looking further down the line. Once it’s reached these guys, settlements are far harder to obtain. The Treasury, especially, aren’t looking to make deals. It’s better to be proactive rather than hiding in the dark hoping a genie has granted your wish true. Contact your lender and find out how you can start the process to remedy the situation.
\r\nA: This is simply not true – unless they’ve stipulated good reasons. If your bank is telling you that settlements are an impossibility, it’s one of three things:
\r\nThe employee your speaking with doesn’t know what they’re talking about
\r\nThere are some great cues that give you an indication of whether they’re talking baloney. Often they’ll say that regular rules don’t apply because it’s an SBA loan. Incorrect.
\r\nThey’re buying time
\r\nBanks don’t want to settle. They want the full amount or to keep charging you outrageous interest rates. Settling means accepting defeat and lower profits. By telling you that settlements aren’t possible, they’re stalling. Either they’re hoping you believe them and either pay up in full or through interest — or they’re hoping they can buy a bit more time before you wise up.
\r\nYou’re not eligible
\r\nThere are a few reasons you won’t be able to settle. If your collateral will cover it, you won’t be able to settle. If your guarantor can pay it, you won’t be able to settle. If your business is still open, the settlement’s out the question again. And if you’ve done something wrong, like lying about assets, no settlement for you either.
\r\nA: Lawyers are experts in law, not finance. While it’s advisable to have a lawyer check over the legal documentation concerning your settlement, many attorneys are inexperienced when it comes to negotiating a SBA loan settlement.
\r\nSBA loans are a very specific type of debt. You need a specialist in the OIC process, with experience in the field, to advise you on settling your SBA loan. Attorneys don’t always have the required niche skill set to do this.
\r\nIn terms of SBA policy, there is no requirement for you to have a lawyer in the SBA settlement process.
\r\nA: One of the major reasons that settlements work in the financial industry is because you’re offering to save them the hassle, time, and resources involved in chasing you by paying a significant portion of it all at once. In this sense, and as it says on the SBA Form 1150, lump sums are most certainly preferred.
\r\nThat said, in some circumstances, a payment plan will work. If you can’t raise a lump sum, but you have a steady job, this source of income starts to look promising. This is most often when I’ve seen payment plans approved.
\r\nWhen possible, I always push for the lump sum. Why? By paying a lump sum, you get it over and done with. With a payment plan, all you need to do is miss a single payment, and the entire settlement can be voided and send you back to square one.
\r\nUnfortunately, there are some pretty monumental consequences if you default on your SBA loan. You may think your home is safe, but actually, banks can come after the equity in your home. You may find that your business has to shut down and that 'enforced collections' make you sell all business assets – including commercial real estate.
\r\nIf that’s not enough, banks can go to court and obtain a personal judgment against you. In this case, you could subpoenaed for information. In some states, you could be arrested if you don’t respond.
\r\nA: No. Just because you didn’t put your home up against the loan, doesn’t mean you’re off the hook. In some states, courts allow creditors to put a judgment lien on your house. Even if they can’t foreclose, it could prevent you from refinancing or selling your home.
\r\nA: You need to get it in writing. If you were speaking to a salesperson, they may have been saying whatever they thought would get you to sign up. Do you think that 3 years later they’ll remember what they told you? And if they do, do you think they’ll own up to it? Likely not.
\r\nA: While my previous understanding was no, my experience has proved me wrong on rare occasions. For my entire career, I’ve told clients that an SBA settlement will not harm their personal credit. However, I had a client come back to me following entry on his credit report referring to the SBA settlement. This happened again a couple of weeks later with a different client. Upon investigation, I found that those clients who had had a credit entry dealt with the SBA directly – although this could have been a coincidence. Either way, by challenging this entry, we had it removed from their reports.
\r\nA: It doesn’t matter how you structure your business. When you took out your SBA loan, you signed to be personally liable for the loan with a personal guarantee. This means that you agree to use your own funds if the business cannot repay.
\r\nA: This is a major consequence of SBA settlement. It’s very unlikely you’ll ever be able to get an SBA loan if you don’t pay back. The SBA adds you to the Credit Alert Verification Reporting System (CAIVRS). This also means that you’ll have difficulty getting any federally subsidized loans including government-guaranteed student loans or FHA loans.
\r\nA: No. For the SBA to even consider a settlement, you need to close shop or sell the business. They won’t reduce the loan balance based on the value you should have paid, even if the price was inflated by seller fraud.
\r\nSome people mention predatory lending, that the bank should have known the business was a lemon. Keep in mind the lender’s job is not to vet the business for you. Their job is to figure out if you can repay the debt. A loan approval is not the bank certifying that the price you are paying is the right price.
\r\nA: The SBA’s guarantee is to the lender. This means that the lender gets reimbursed for 75%, not the borrower. In fact, the SBA guarantee has no impact on what you, the borrower, owes. It only impacts who is taking the financial loss if you default and don’t repay your SBA loan in full.
\r\nThis 75/25 structure encourages lenders to lend money to small businesses. If lenders know that their total sum owed is insured by the SBA for 75%, they know they only lose 25% of the loan in the worst-case scenario. This makes lenders more likely to provide credit for riskier small businesses.
\r\nA: No. When you sign for an SBA loan with another person, you typically both agree to be 100% liable for the loan (unless the guarantee you signed specifically says otherwise). This means that you’re liable for the full amount, as is your partner. Even if your partner pays nothing, you’ll be expected to pay as much as you can afford even if that means paying it in full. And vice versa.
\r\nEven if you try to escape by not paying, the banks and SBA will come after the person with the best financial profile. So, as you move up the financial ladder in life, you become a better target.
\r\nA: No. Some less-than-ethical consultants pitch this scheme. It's not a sophisticated strategy, it’s a scam. This is fraudulent behavior that I’d never suggest to a client. Full disclosure is the wisest move. Unless you declare the nature of all transactions to your lender and the SBA, gaining approval, then it’s a fraud. If someone pitches this idea to you, ask them if the lender will know all the details. If there is a separate agreement that won’t be sent to the lender, that’s a red flag.
\r\nA: It’s more complex than that. After you’ve had permission to sell your assets and you’ve done so, you enter the OIC stage. This is where you negotiate the figure to pay back.
\r\nThe Offer in Compromise is about releasing your personal guarantee. If you have a personal guarantee to the loan, after you’ve sold your business assets and handed over the money, the bank can still come after your personal assets. This can include your home, savings and wages. As most banks are shrewd enough to realize there probably isn’t much money in your failing business, they hone in on personal guarantees to supplement the difference.
\r\nIf your OIC is approved, it releases you from the personal guarantee. Once this is agreed, neither the bank nor SBA can chase your personal assets (unless you default on the settlement terms).
\r\nA: It’s highly unlikely. If the combined value of the borrower’s assets and your assets will cover the loan, they’ll expect the money. They don’t settle for the sake of settling. You need to prove financial hardship and a lack of ability to repay the debt in full.
\r\nA: Payment plans are less common, and not the SBA’s preference. If your assets won’t cover the full amount, they’ll consider a payment plan:
\r\nIf you have a stable job
\r\nIf the income will enable you to repay the amount within a reasonable time period
\r\nA: The bank isn’t concerned with your altruism. They just want their money and you signed a paper saying you’d pay it back if your friend couldn’t. The whole reason you signed a personal guarantee: in case your friend’s business went under, you could pick up the debt. If you weren’t in a position to do this, you shouldn’t have agreed. In that respect, you have to honor the contract.
\r\nA: Just because you file for bankruptcy personally, does not mean your business is free and clear. Filing for personal bankruptcy releases your personal liability. It does not release your business liability. In this sense, if there are assets of value in your business, they can still chase those if the loan doesn’t get paid.
\r\nIn cases of personal bankruptcy, I’ve seen lenders allow businesses to continue to operate provided that they continue to make the loan payment as agreed. Then again, I’ve seen others treat the bankruptcy as an event of default, in which case they could attempt to shut you down and liquidate the business assets.
\r\nA: The SBA doesn’t require you to file for bankruptcy to undergo the settlement process. While there may be many reasons that business bankruptcy is a good strategic move, it has no bearing on the OIC process and does NOT release you from personal liability.
\r\nA: It's best to speak to a bankruptcy attorney about this, but in general, if there’s a lien on your home before bankruptcy, it will be there after bankruptcy. The only exception would be if there were no equity in the home. I’ve helped a number of clients over the years to negotiate a lien release following a personal chapter 7 bankruptcy discharge.
\r\nA: Both routes have their pros and cons and suit different circumstances better. My advice is to do your research. The best way of doing this is to speak with the experts. Ask a bankruptcy attorney how the process works, the costs, the time, the hurdles, the rate of success and the future impact. Then do the same with an SBA default expert.
\n","docType":"article","guid":"articles_a7aa0b992b45228c1d41c0abcdecdb0e","lastModified":"2021-08-06T20:42:00.000Z","published":"2019-11-04T15:00:00.000Z","structuredData":null,"subtitle":"Here's a comprehensive guide to all your questions about SBA loan default, forgiveness and the SBA Offer In Compromise.","template":"v1","title":"SBA Loan Default: A Complete Guide for 2020 and Beyond","type":"article","author":{"avatar":null,"bio":"After a decade as a commercial underwriter and lender, Jason Milleisen founder Distressed Loan Advisors. Since 2009, DLA has helped hundreds of small business owners through the SBA Offer in Compromise process, resulting in over $50 Million saved. Jason is a former workout officer for the largest SBA lender in the US, where he oversaw a $400 Million portfolio of delinquent SBA loans.","name":"Jason Milleisen","image":null,"slug":null,"social":{"facebook":"","linkedin":"https://www.linkedin.com/in/jason-milleisen-7487485/","twitter":null,"website":"https://www.jasontees.com"},"status":"enabled","title":null,"type":"New BDC Member","user":{"imagePath":"https://staging.business.com/images/uploads/user/profile/b698bd5c29da76869aad7781ba2af3f27455b.jpg","profile":{"company":"Distressed Loan Advisors","jobTitle":"Founder","website":"https://www.jasontees.com"}}},"breadcrumbs":null,"channels":{"primary":{"name":"Finance","slug":"finance"},"sub":{"name":"Funding","slug":"funding"}},"meta":{"robots":"index, follow","description":"Here's everything you need to know about defaulting on an SBA loan when you're starting a small business.","title":"Small Business Guide to SBA Loan Default - business.com"},"parsedContent":{"toc":[{"id":"take-a-look-in-the-mirror","title":"Take a look in the mirror"},{"id":"examine-your-settlement-options","title":"Examine your settlement options"},{"id":"what-is-an-offer-in-compromise","title":"What is an Offer in Compromise?"},{"id":"meet-your-financial-difficulties-head-on","title":"Meet your financial difficulties head-on"},{"id":"be-thoughtful-and-prepared","title":"Be thoughtful and prepared"},{"id":"get-permission-first","title":"Get permission first"},{"id":"start-digging-for-buried-treasure","title":"Start digging for buried treasure"},{"id":"be-completely-honest","title":"Be completely honest"},{"id":"shut-your-doors-and-sell-off-what-youve-got","title":"Shut your doors and sell off what you've got"},{"id":"submit-a-detailed,-fair-and-correct-offer-in-compromise","title":"Submit a detailed, fair and correct Offer in Compromise"},{"id":"submit-your-offer-in-compromise-and-hold-your-breath","title":"Submit your Offer in Compromise (and hold your breath):"},{"id":"faqs-on-sba-settlement","title":"FAQs on SBA settlement"},{"id":"the-consequences-of-an-sba-loan-default","title":"The consequences of an SBA loan default"},{"id":"sba-loans-and-bankruptcy","title":"SBA Loans and Bankruptcy"}],"json":[{"component":"ul","children":[{"component":"li","children":["Do your homework to find out what your options are."]},{"component":"li","children":["Gather as much data as you can."]},{"component":"li","children":["Work with the SBA on a settlement."]}]},{"component":"p","children":["Running a business can be tough – it doesn’t always work out the way we planned. This can leave us worrying about paying back those pesky business loans. This guide is crafted to help anyone who ..."]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Has defaulted on an SBA loan"]}]},{"component":"li","children":[{"component":"p","children":["Is considering settling on an SBA loan"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Is concerned about SBA loans and bankruptcy"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Personally guarantees an SBA loan"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Is conducting research before taking out an SBA loan"]}]}]},{"component":"p","children":["I’m Jason Milleisen, the founder of ",{"component":"a","props":{"href":"https://www.jasontees.com/","target":"_blank","rel":"nofollow noopener external"},"children":["Distressed Loan Advisors"]},". As an SBA default expert, I use my wealth of professional experience to negotiate settlements. Thanks to my stint as a workout officer for the largest SBA in the U.S., followed by the past 10 years of working directly with borrowers as a consultant, I've learned a lot I can share. "]},{"component":"p","children":["If you're looking to cross a bridge (or perhaps a gauntlet would be more appropriate), you have to start somewhere. This means taking that crucial first step of admitting to yourself that failure (and the resulting default) is a real possibility. Where do you get started when you’ve defaulted on your SBA loan? How do you get from zero to one?"]},{"component":"BestPicks","props":{"id":"BestPicksPlaceHolder","className":"widget-best-picks placeholder","data-mce-contenteditable":"false"},"children":["Best Pick Cards"]},{"component":"h2","children":[" "]},{"component":"h2","props":{"id":"take-a-look-in-the-mirror"},"children":["Take a look in the mirror"]},{"component":"p","children":["While it may be emotional to have your SBA loan hanging over you, consider your options wisely. Before the SBA will even sniff at a settlement, they need to know you've already done everything in your power to pay off your loan in full."]},{"component":"p","children":["Your loan is likely secured by your business assets. If the collective value of these business assets will cover the loan, you'll need to sell them to repay the full amount. If you’re lucky, you might not have to sell everything, and your business can still continue to operate on bare-bones resources. The reality is that, in most situations, the business folds."]},{"component":"p","children":["In the vast majority of situations, selling the business assets won't cover the full loan. You'll need to close your business as well as selling off the assets. "]},{"component":"p","children":["In both cases, you’ll need to contact your bank before selling anything to get written approval to sell the assets. If you skip this crucial step, it could be disastrous. Your lender has a lien on all the business assets, and they won’t be willing to release them if you sell the assets for less than the bank values them at."]},{"component":"h2","props":{"id":"examine-your-settlement-options"},"children":["Examine your settlement options"]},{"component":"p","children":["While you may be struggling to pay your SBA loan back, that doesn’t automatically mean you get approved for settlement. In fact, a huge number of Offers in Compromise are rejected. This can be for several reasons, so making sure you’re eligible will save you a lot of time. To be eligible for an SBA loan settlement ..."]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["You must cease business operations and inform your bank of this."]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["You must liquidate all assets – if these cover the full amount of the loan, you aren't eligible."]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["You must provide full financial disclosure with your OIC – they won't negotiate blind."]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Your offer must exceed your collateral – even if this is your home. Simply offering the SBA the value of the collateral isn’t enough. "]}]}]},{"component":"h2","props":{"id":"what-is-an-offer-in-compromise"},"children":["What is an Offer in Compromise?"]},{"component":"p","children":["Also known as an OIC, an Offer in Compromise is a proposal sent by the borrower to settle the debt at a reduced amount. To support this proposed settlement offer, you'll need to provide full disclosure on your personal finances (some banks require business financials, although the SBA doesn't typically require them). "]},{"component":"p","children":["This settlement offer is first sent to your lender, who will recommend it to the SBA if they deem the offer to be acceptable. Then, it's up to the SBA to approve or reject your proposal. Either way, both your lender and the SBA have to agree to your terms for the settlement (unless the file has been referred to the SBA, in which case it only needs SBA approval)."]},{"component":"p","children":["Having worked with many different clients, I've negotiated deals for all kinds of situations. Mostly, the same issues arise across the board, causing the settlement process to slow down or the proposal to be rejected. Here's how to address these pain points to set you on the right track from the start."]},{"component":"h2","props":{"id":"meet-your-financial-difficulties-head-on"},"children":["Meet your financial difficulties head-on"]},{"component":"p","children":["Can’t make ends meet? Struggling to pay off debts? Scared they'll come for your business and home? Sticking your head in the sand won't help."]},{"component":"p","children":["If you want to get out of the rut you’re stuck in, you need to take the necessary steps forward. Ignoring bank phone calls or ignoring lenders' letters won't stop them from coming. You're better off calling the bank directly to ask how you can cooperate, otherwise you’re inviting litigation. Having a lender who feels like you've handled the situation openly and honestly could generate a nudge toward a \"yes\" when the lender is on the fence about your OIC."]},{"component":"h2","props":{"id":"be-thoughtful-and-prepared"},"children":["Be thoughtful and prepared"]},{"component":"p","children":["If you want to settle, you need to balance the SBA's requirements, with the reality of your personal finances. Lenders are typically interested in the low hanging fruit: this means funds sitting in a checking or investment account, or in real estate (especially any pledged real estate), so it's important to consider how, where and when you'll be able to raise any capital you plan to include in your offer."]},{"component":"p","children":["Arm yourself with enough information to understand the process, and specifically what order each step goes in. It’s a good idea to lay out a plan for yourself. Consider how you’ll close your business. How and where will you sell your assets? What other avenues do you have for funding (such as family and friends) if you lack the assets or income to fund the loan yourself? "]},{"component":"h2","props":{"id":"get-permission-first"},"children":["Get permission first"]},{"component":"p","children":["Before selling any business assets to drum up cash to settle your loan, you must ask for permission from your lender. While this may seem to slow down the process, banks and lenders don't like the idea of you selling their collateral without their knowledge. They want to know how much you are selling it for (to ensure you didn't give it away), and want to ensure that every single penny goes in their pocket, not yours."]},{"component":"p","children":["A common point of confusion around the liquidation of business assets is getting \"credit\" for the sale. Proceeds from the sale of business assets must be applied to the principal balance of your loan. The proceeds cannot be used to fund your settlement. Any funds that are going to fund your OIC must come from personal reserves. Business assets (including cash in the business account) are part of the collateral package."]},{"component":"h2","props":{"id":"start-digging-for-buried-treasure"},"children":["Start digging for buried treasure"]},{"component":"p","children":["To get your offer taken seriously, you need to show them what you've got (i.e. full disclosure), and that you've done everything to gather as much as possible. Defaulting on an SBA loan and subsequently pursuing an OIC is much like an invasive medical procedure. Stressful? Yes. Uncomfortable? Very. Necessary for a positive outcome? You betcha."]},{"component":"p","children":["Don’t have enough in your own piggy bank? Try turning to friends and family to borrow capital. Look to refinancing your house, taking on extra credit cards or dipping into an overdraft. While these suggestions are far from ideal, neither is dealing with the Treasury after they add a 28% penalty to your loan balance."]},{"component":"h2","props":{"id":"be-completely-honest"},"children":["Be completely honest"]},{"component":"p","children":["The SBA Offer In Compromise (OIC) process requires full disclosure. This means being completely honest about the funds and assets that you have. If you’re not, and the SBA or your lender finds out you have hidden assets (there are several ways), your offer will be rejected. Here’s a quick rundown of what needs to be included:"]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Easy access to cash in the bank – both you and your spouse"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Money in yours and your spouse' savings accounts, money market accounts and Certificate of Deposits"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Retirement funds for both you and your spouse – IRA, 401(k) and other types of retirement account"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Accounts and notes receivable – this is the sum of any loan you've personally funded in the past year"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Life insurance policies (cash surrender value is a common target)"]}]},{"component":"li","children":[{"component":"p","children":["Real estate owned by you or your spouse, both commercial and residential"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Valuable personal property – home, gold, gemstones, antiques, artwork, valuable collections, pricey electronics, expensive furniture. They don’t want your couch or your 1981 Toyota, but if you are living an extravagant lifestyle with expensive possessions (like a luxury boat), be prepared to part with them.",{"component":"br"},{"component":"br"}]}]}]},{"component":"p","children":[{"component":"strong","children":["Editor's note: Seeking a tax debt relief service? Fill out the below questionnaire to have our vendor partners contact you with free information."]}]},{"component":"RfqWidget","props":{"className":"bz-form-widget","id":"bz-form-widget-0","widgetCategoryId":"10729"},"children":[" "]},{"component":"h2","props":{"id":"shut-your-doors-and-sell-off-what-youve-got"},"children":["Shut your doors and sell off what you've got"]},{"component":"p","children":["There are three ways to ",{"component":"Link","props":{"href":"https://www.business.com/articles/tips-for-selling-business/"},"children":["liquidate assets from your business"]},". The method you pick may rely on your industry contacts, the time you have, and the value tied up. Consider these three options and pick a plan of action that suits you:"]},{"component":"h3","children":["Sell as a \"Going Concern\""]},{"component":"p","children":["Like selling a used car, it's possible to sell your business as a whole, with the idea that the buyer might carry on trading. The idea behind this is that there is greater value in the business as a complete entity than in the parts separately."]},{"component":"p","children":["Unlike selling a used car, however, your business currently doesn't work. That means that when you're scoping out a buyer for your business as a 'Going Concern,' you’ll likely be selling the business for less than what you owe. It’s basically like a short sale on a house."]},{"component":"h3","children":["Sell for parts"]},{"component":"p","children":["If nobody wants to take over your downtrodden business, you need to look at selling off the individual parts of the system. Look at the valuable assets within the company, such as industrial equipment, real estate, vehicles and high-tech electronics."]},{"component":"p","children":["Consider using eBay, Facebook Marketplace, or Amazon for smaller items like laptops and tablets, costly tradesmen’s fittings, high-value clothing stock and so on. There are also auction companies that will handle everything, but it usually comes at a fairly high price."]},{"component":"h3","children":["Let the bank to find a buyer"]},{"component":"p","children":["This is usually the last resort, only to be used if you have no other options. The problem with having the bank sell your possessions is that they’re not likely to push for the highest price. They take what they can get. In these situations, they typically value the speed of the sale over getting top dollar. ",{"component":"strong","children":["[Need help with tax debt? Check out our reviews and best picks of ",{"component":"Link","props":{"href":"https://www.business.com/categories/best-tax-debt-relief-services/"},"children":["tax debt relief providers"]},".]"]}]},{"component":"h2","props":{"id":"submit-a-detailed,-fair-and-correct-offer-in-compromise"},"children":["Submit a detailed, fair and correct Offer in Compromise"]},{"component":"p","children":["If you’ve sold off all your assets and you still can’t pay back your loan, you need to move into phase 2 – submitting an Offer in Compromise package to your lender."]},{"component":"h3","children":["Ask your lender about OIC"]},{"component":"p","children":["The first stage of this is to speak directly with your lender to see if they'll accept an Offer in Compromise. There's no point pouring time into the process if there’s no chance they’ll entertain it. Most banks will say yes, but occasionally I come across situations where lenders, for one reason or another, won’t consider an OIC once a borrower has gone into default."]},{"component":"p","children":["Bear in mind that there is a myriad of reasons why your lender may reject your request for an Offer in Compromise on your SBA loan. Here are some typical ones:"]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Your loan is already fully secured with collateral. In this sense, the lender knows they can receive the full amount by selling your collateral, so why would they accept a lower offer?"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Your income is high enough to pay the loan off in full within a reasonable period"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Your collateral, combined with your guarantor’s assets will cover the loan"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Your income, combined with your guarantor’s income will cover the loan in a reasonable period"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["You did something wrong in the process, like selling off assets without getting permission from the lender first."]}]}]},{"component":"h3","children":["Submit a pristine set of documents"]},{"component":"p","children":["To set the wheels into motion, you’ll need to submit a catalog of forms and personal financial information. This must all be accurate and truthful or you run the risk of rejection. First, you need to fill out these five forms:"]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":[{"component":"a","props":{"href":"https://www.irs.gov/pub/irs-pdf/f4506t.pdf","rel":"nofollow"},"children":["Form 4506T"]}]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":[{"component":"a","props":{"href":"https://www.sba.gov/sites/default/files/files/tools_sbf_finasst912_4.pdf","rel":"nofollow"},"children":["SBA Form 912"]}]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":[{"component":"a","props":{"href":"https://www.sba.gov/sites/default/files/files/Borrower%27s%20Authorization%20and%20Consent%20to%20Verify%20Information.pdf","rel":"nofollow"},"children":["SBA Consent to Verify"]}]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":[{"component":"a","props":{"href":"https://www.sba.gov/sites/default/files/forms/SBA_Form_770_new.pdf","rel":"nofollow"},"children":["SBA Form 770"]}]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":[{"component":"a","props":{"href":"https://www.sba.gov/sites/default/files/files/sba_elending_clc_forms1150_4.pdf","rel":"nofollow"},"children":["SBA Form 1150"]}]}]}]},{"component":"p","children":["The last two forms, the 770 and 1150, are especially vital to this process. The SBA Form 770 is for you to make full, accurate disclosure of your assets. Don't try to hide anything or transfer assets; they ask about everything and they will find out, and you'll be subject to enforced collection."]},{"component":"p","children":["The SBA Form 1150 is a chance to give your side of the story. This is your moment to show your real assets and income and why this won’t cut it. To nail this form, get in the lender's shoes and look back at yourself; have you considered all the avenues to assets that the lender will consider? This form is to prove that you’ve tried to squeeze every bit of blood from the stone, yet it still won't cover the full loan. "]},{"component":"p","children":["You'll also need tax documentation:"]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Previous 2 years’ of personal tax returns (the year prior if last years aren’t ready)"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["If last year's tax returns aren't ready, you’ll need to provide proof of income for last year – such as self-employed P/L sheets and your balance sheet and pay stubs for employees"]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["Proof of income for this year (pay stubs are sufficient)"]}]}]},{"component":"h2","props":{"id":"submit-your-offer-in-compromise-and-hold-your-breath"},"children":["Submit your Offer in Compromise (and hold your breath):"]},{"component":"p","children":["If everything goes smoothly, you'll have an answer in 4 to 8 months. To speed this process up, try to be as responsive as you can, replying promptly to email and phone calls with any information needed. While you may have airdropped an encyclopedia-worth of paperwork with your application, your lender and SBA will likely need more information later. You may be sure you get it to them promptly to prevent bottlenecking (or having it put on the back burner) your application. Clerical errors are one of the biggest hold-ups for financial entities. Take the time to double and triple-check everything you submit."]},{"component":"h3","children":["What’s taking the SBA so long to decide on your OIC?"]},{"component":"p","children":["There is no standardized procedure between lenders. Delays can be caused by internal hold-ups in the bank, such as short staffing or the need for third-party verification of documentation. The same goes for different branches of the SBA – some are more efficient than others and therefore operate more quickly. Both of these scenarios are out of your control."]},{"component":"p","children":["Appraisers slow down the process as lenders need to confirm valuations on your assets. If there are discrepancies between your valuations and that of an appraiser, you may see the process drop down a gear as lenders and the SBA seeks to verify this."]},{"component":"h3","children":["Should I follow up with the SBA or my lender?"]},{"component":"p","children":["While you don’t want to badger anyone, you want to keep your finger on the pulse of the process. Don't hound your lender immediately – wait a couple of weeks before initiating follow-up. Not sure what to say, try this script:"]},{"component":"p","children":["\"Hello. I have submitted an 'Offer in Compromise' and I was wondering if anyone had had a chance to review it yet. Is there any more information that you need from me, which would help to ease the process? Have you any idea what the bottlenecks are, and if I can be of any help in speeding things up?\""]},{"component":"h3","children":["Approved? Great news — now what?"]},{"component":"p","children":["Just because you’ve been accepted, doesn’t mean you can sit back and put your feet up. "]},{"component":"ul","children":[{"component":"li","children":[{"component":"h4","children":["Are all parties in agreement?"]}]}]},{"component":"p","children":["Just because your lender has approved your OIC, doesn't mean you're off scot-free. You need to have approval from both your lender and the SBA before your settlement is fully accepted."]},{"component":"ul","children":[{"component":"li","children":[{"component":"h4","children":["Have you got your settlement in writing?"]}]}]},{"component":"p","children":["Verbal conversation isn't enough. Always, always, always get your settlement agreement in writing. Bear in mind that there’s no standardized procedure for this. Some banks may send you a letter from their attorney, others may drop you a note on headed paper. The SBA likes to keep it casual, sending nothing more than an email."]},{"component":"ul","children":[{"component":"li","children":[{"component":"h4","children":["Have you contacted an attorney?"]}]}]},{"component":"p","children":["Settlement agreements are often legally binding agreements. If there’s a fault in the paperwork or a clause you can’t adhere to, this may cause legal problems later. Having an attorney verify the papers are valid and accurately reflect the settlement terms can save you a headache later and give you peace of mind now."]},{"component":"ul","children":[{"component":"li","children":[{"component":"h4","children":["Have you made a strategic plan to stick to the terms?"]}]}]},{"component":"p","children":["Getting a settlement on your SBA loan is only the first hurdle. You’ll now need to work out how you’re going to honor the terms of the settlement. If you default at this stage, there could be legal repercussions that could result in drastic consequences like foreclosure, bank levy, or wage garnishment."]},{"component":"p","children":["Making monthly installments? Automate your payments if possible. Budget wisely to make do without this money and find side hustles to fill in the gaps."]},{"component":"h3","children":["Not so lucky this time? Get back on the horse"]},{"component":"p","children":["Don’t feel disheartened if your Offer in Compromise was rejected. Rejections happen, but it doesn’t necessarily mean game over. If you’ve been rejected, get up, shake off the dust and go at it again. It’s wise to use your first try as a learning experience. The easiest route to pinpointing your downfall would be to simply ask. Give your lender a call and ask to speak about your recent application. Try using wording a little like this:"]},{"component":"p","children":["\"Hi. I recently had an Offer in Compromise rejected. Please, could you help me to identify where I went wrong? I thought my offer was representative and realistic, however, your team doesn’t agree. I’d love some insights on where we differ in opinion, and how I could improve my offer to meet your expectations.\""]},{"component":"p","children":["Be aware that sometimes, if you're rejected by the SBA, they may send your debt to the U.S. Treasury for collection (settlements are hard to come by once that happens), so this is not the time to throw in the towel. It’s time to persist and see this thing through."]},{"component":"h2","props":{"id":"faqs-on-sba-settlement"},"children":["FAQs on SBA settlement"]},{"component":"p","children":["While no two cases are the same, as a consultant specializing in SBA default and forgiveness, I do get the same questions more than once. Below is a collection of those questions, and the answers."]},{"component":"h3","children":["Q: I heard SBA settlements are really rare, is it even worth the effort trying?"]},{"component":"p","children":["A: SBA settlements are not a foregone conclusion. Deals of this kind are saved for cases where the lender really sees no other way to recuperate the full amount and the borrower can offer good reasons why they can’t honestly pay it back in full."]},{"component":"p","children":["Despite how difficult it is, settlements are possible – especially if it's clear to the lender and the SBA that a settlement is going to result in their best recovery."]},{"component":"h3","children":["Q: I’m desperate to solve this as quickly as possible, how long will the SBA settlement process take?"]},{"component":"p","children":["A: While, yes, it is humanly possible that you could get your answer within 4 months, that’s hardly ever the case. I certainly wouldn’t bet my last dime on it. The average wait time is around 4 to 8 months, but this only happens if there are absolutely no hiccups along the way."]},{"component":"p","children":["Be prepared for this to take longer than expected. I’ve seen my fair share of hold-ups over my time. As each lender is different, so is each SBA branch. While office policies differ throughout regional locations, as do the staff in each company. This means different wait times for each."]},{"component":"p","children":["Equally, you may have to enter a negotiation where you’re posed with counteroffers. This back and forth takes time."]},{"component":"p","children":["Ask yourself what is within your control that can speed up the process. Make sure all your documentation is correct and complete and submitted on time. Ensure that you’re responsive with all parties concerned and promptly provide any extra details needed."]},{"component":"h3","children":["Q: Who do I start with? My lender or the SBA?"]},{"component":"p","children":["A: As a general rule of thumb, you’ll go through your lender unless you’ve heard directly from the SBA or the Treasury. Once the lender gets to the point where they realize they can’t squeeze one more cent from you, they close the file and refer you over to the SBA. Lenders really don’t like it if you try to go over their heads by going directly to the SBA without talking with them first."]},{"component":"p","children":["In less common circumstances, you might get a letter directly from the SBA. Often called a 60-day letter, this is a pretty good indication that your lender isn’t involved in the process any longer. In that case, you're dealing directly with the SBA, so talk to them first. They may send you back to the lender anyway, but that’s just life!"]},{"component":"h3","children":["Q: My business received a '60-day letter.' What does this mean?"]},{"component":"p","children":["A: This means that the loan has been \"charged off.\" The SBA is now giving you 60 days to work out repayment terms or submit an Offer In Compromise."]},{"component":"h3","children":["Q: The 60-Day letter was addressed to me personally? Does that make me personally liable?"]},{"component":"p","children":["A: The signing of the personal guarantee is what makes you liable. Never ignore a 60-day letter addressed to you personally, sign it’s a sign that you are likely personally liable. If you receive a letter of this nature addressed to you personally, you need to deal with it immediately. Don’t leave it until the last minute – the consequences are tragic if you can’t pay. 60 days is a hard deadline. "]},{"component":"h3","children":["Q: The bank never asked for the money. Does that mean my SBA debt has been forgiven?"]},{"component":"p","children":["A: While the silence might be a relaxing breather for you, it doesn’t mean the bank has forgotten about you. Often it means they’ve passed you over and therefore have no need to hound you anymore. Instead, you’ll sit in the backlog of the SBA or Treasury until someone comes looking further down the line. Once it’s reached these guys, settlements are far harder to obtain. The Treasury, especially, aren’t looking to make deals. It’s better to be proactive rather than hiding in the dark hoping a genie has granted your wish true. Contact your lender and find out how you can start the process to remedy the situation."]},{"component":"h3","children":["Q: I spoke to the bank and they said that settlements aren’t an option. Why would they lie?"]},{"component":"p","children":["A: This is simply not true – unless they’ve stipulated good reasons. If your bank is telling you that settlements are an impossibility, it’s one of three things:"]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["The employee your speaking with doesn’t know what they’re talking about"]}]}]},{"component":"p","children":["There are some great cues that give you an indication of whether they’re talking baloney. Often they’ll say that regular rules don’t apply because it’s an SBA loan. Incorrect."]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["They’re buying time"]}]}]},{"component":"p","children":["Banks don’t want to settle. They want the full amount or to keep charging you outrageous interest rates. Settling means accepting defeat and lower profits. By telling you that settlements aren’t possible, they’re stalling. Either they’re hoping you believe them and either pay up in full or through interest — or they’re hoping they can buy a bit more time before you wise up."]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["You’re not eligible"]}]}]},{"component":"p","children":["There are a few reasons you won’t be able to settle. If your collateral will cover it, you won’t be able to settle. If your guarantor can pay it, you won’t be able to settle. If your business is still open, the settlement’s out the question again. And if you’ve done something wrong, like lying about assets, no settlement for you either."]},{"component":"h3","children":["Q: Do I need a lawyer to settle my SBA loan?"]},{"component":"p","children":["A: Lawyers are experts in law, not finance. While it’s advisable to have a lawyer check over the legal documentation concerning your settlement, many attorneys are inexperienced when it comes to negotiating a SBA loan settlement. "]},{"component":"p","children":["SBA loans are a very specific type of debt. You need a specialist in the OIC process, with experience in the field, to advise you on settling your SBA loan. Attorneys don’t always have the required niche skill set to do this."]},{"component":"p","children":["In terms of SBA policy, there is no requirement for you to have a lawyer in the SBA settlement process. "]},{"component":"h3","children":["Q: I don’t have a lump sum right now. Is a payment plan possible?"]},{"component":"p","children":["A: One of the major reasons that settlements work in the financial industry is because you’re offering to save them the hassle, time, and resources involved in chasing you by paying a significant portion of it all at once. In this sense, and as it says on the SBA Form 1150, lump sums are most certainly preferred. "]},{"component":"p","children":["That said, in some circumstances, a payment plan will work. If you can’t raise a lump sum, but you have a steady job, this source of income starts to look promising. This is most often when I’ve seen payment plans approved."]},{"component":"p","children":["When possible, I always push for the lump sum. Why? By paying a lump sum, you get it over and done with. With a payment plan, all you need to do is miss a single payment, and the entire settlement can be voided and send you back to square one."]},{"component":"h2","props":{"id":"the-consequences-of-an-sba-loan-default"},"children":["The consequences of an SBA loan default"]},{"component":"p","children":["Unfortunately, there are some pretty monumental consequences if you default on your SBA loan. You may think your home is safe, but actually, banks can come after the equity in your home. You may find that your business has to shut down and that 'enforced collections' make you sell all business assets – including commercial real estate."]},{"component":"p","children":["If that’s not enough, banks can go to court and obtain a personal judgment against you. In this case, you could subpoenaed for information. In some states, you could be arrested if you don’t respond. "]},{"component":"h3","children":["Q: I was smart enough not to put my home as collateral. I'm safe, aren't I?"]},{"component":"p","children":["A: No. Just because you didn’t put your home up against the loan, doesn’t mean you’re off the hook. In some states, courts allow creditors to put a judgment lien on your house. Even if they can’t foreclose, it could prevent you from refinancing or selling your home."]},{"component":"h3","children":["Q: I took the loan out and put my house as collateral. I only did this because I was told by my bank that the lien would be released after 12 months of paying on time. Why haven't they released it?"]},{"component":"p","children":["A: You need to get it in writing. If you were speaking to a salesperson, they may have been saying whatever they thought would get you to sign up. Do you think that 3 years later they’ll remember what they told you? And if they do, do you think they’ll own up to it? Likely not."]},{"component":"h3","children":["Q: Will a business loan settlement harm my personal credit?"]},{"component":"p","children":["A: While my previous understanding was no, my experience has proved me wrong on rare occasions. For my entire career, I’ve told clients that an SBA settlement will not harm their personal credit. However, I had a client come back to me following entry on his credit report referring to the SBA settlement. This happened again a couple of weeks later with a different client. Upon investigation, I found that those clients who had had a credit entry dealt with the SBA directly – although this could have been a coincidence. Either way, by challenging this entry, we had it removed from their reports."]},{"component":"h3","children":["Q: When I started, I registered as a corporation, so I’m not personally liable – am I?"]},{"component":"p","children":["A: It doesn’t matter how you structure your business. When you took out your SBA loan, you signed to be personally liable for the loan with a personal guarantee. This means that you agree to use your own funds if the business cannot repay."]},{"component":"h3","children":["Q: If I settle this SBA loan, what are the chances of ever getting another SBA loan?"]},{"component":"p","children":["A: This is a major consequence of SBA settlement. It’s very unlikely you’ll ever be able to get an SBA loan if you don’t pay back. The SBA adds you to the Credit Alert Verification Reporting System (CAIVRS). This also means that you’ll have difficulty getting any federally subsidized loans including government-guaranteed student loans or FHA loans."]},{"component":"h3","children":["Q: I overpaid for my business. Could I reduce the repayment amount based on the lower value it’s worth?"]},{"component":"p","children":["A: No. For the SBA to even consider a settlement, you need to close shop or sell the business. They won’t reduce the loan balance based on the value you should have paid, even if the price was inflated by seller fraud."]},{"component":"p","children":["Some people mention predatory lending, that the bank should have known the business was a lemon. Keep in mind the lender’s job is not to vet the business for you. Their job is to figure out if you can repay the debt. A loan approval is not the bank certifying that the price you are paying is the right price."]},{"component":"h3","children":["Q: If the SBA guaranteed 75% of my loan to the lender, I'll only need to repay 25% right?"]},{"component":"p","children":["A: The SBA’s guarantee is to the lender. This means that the lender gets reimbursed for 75%, not the borrower. In fact, the SBA guarantee has no impact on what you, the borrower, owes. It only impacts who is taking the financial loss if you default and don’t repay your SBA loan in full."]},{"component":"p","children":["This 75/25 structure encourages lenders to lend money to small businesses. If lenders know that their total sum owed is insured by the SBA for 75%, they know they only lose 25% of the loan in the worst-case scenario. This makes lenders more likely to provide credit for riskier small businesses."]},{"component":"h3","children":["Q: I’m only 50% liable though, aren't I? My business partner and I are 50/50 owners in the business."]},{"component":"p","children":["A: No. When you sign for an SBA loan with another person, you typically both agree to be 100% liable for the loan (unless the guarantee you signed specifically says otherwise). This means that you’re liable for the full amount, as is your partner. Even if your partner pays nothing, you’ll be expected to pay as much as you can afford even if that means paying it in full. And vice versa."]},{"component":"p","children":["Even if you try to escape by not paying, the banks and SBA will come after the person with the best financial profile. So, as you move up the financial ladder in life, you become a better target."]},{"component":"h3","children":["Q: I want to settle without closing my business. What if I sell it to a friend and buy it back later?"]},{"component":"p","children":["A: No. Some less-than-ethical consultants pitch this scheme. It's not a sophisticated strategy, it’s a scam. This is fraudulent behavior that I’d never suggest to a client. Full disclosure is the wisest move. Unless you declare the nature of all transactions to your lender and the SBA, gaining approval, then it’s a fraud. If someone pitches this idea to you, ask them if the lender will know all the details. If there is a separate agreement that won’t be sent to the lender, that’s a red flag."]},{"component":"h3","children":["Q: I simply sell my business assets, hand the cash to the lender, and I'm off the hook?"]},{"component":"p","children":["A: It’s more complex than that. After you’ve had permission to sell your assets and you’ve done so, you enter the OIC stage. This is where you negotiate the figure to pay back."]},{"component":"p","children":["The Offer in Compromise is about releasing your personal guarantee. If you have a personal guarantee to the loan, after you’ve sold your business assets and handed over the money, the bank can still come after your personal assets. This can include your home, savings and wages. As most banks are shrewd enough to realize there probably isn’t much money in your failing business, they hone in on personal guarantees to supplement the difference."]},{"component":"p","children":["If your OIC is approved, it releases you from the personal guarantee. Once this is agreed, neither the bank nor SBA can chase your personal assets (unless you default on the settlement terms)."]},{"component":"h3","children":["Q: I can repay the debt in full but it would devour all my savings. Can we negotiate a settlement?"]},{"component":"p","children":["A: It’s highly unlikely. If the combined value of the borrower’s assets and your assets will cover the loan, they’ll expect the money. They don’t settle for the sake of settling. You need to prove financial hardship and a lack of ability to repay the debt in full."]},{"component":"h3","children":["Q: I can’t help repay the money right now, will they consider a payment plan?"]},{"component":"p","children":["A: Payment plans are less common, and not the SBA’s preference. If your assets won’t cover the full amount, they’ll consider a payment plan:"]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["If you have a stable job "]}]}]},{"component":"ul","children":[{"component":"li","children":[{"component":"p","children":["If the income will enable you to repay the amount within a reasonable time period"]}]}]},{"component":"h3","children":["Q: I was only a guarantor to help my friend in his business. The bank can understand it’s not my fault and negotiate, right?"]},{"component":"p","children":["A: The bank isn’t concerned with your altruism. They just want their money and you signed a paper saying you’d pay it back if your friend couldn’t. The whole reason you signed a personal guarantee: in case your friend’s business went under, you could pick up the debt. If you weren’t in a position to do this, you shouldn’t have agreed. In that respect, you have to honor the contract."]},{"component":"h2","props":{"id":"sba-loans-and-bankruptcy"},"children":["SBA Loans and Bankruptcy"]},{"component":"h3","children":["Q: I'm considering personal bankruptcy. Will this affect my business? Can I get shut down?"]},{"component":"p","children":["A: Just because you file for bankruptcy personally, does not mean your business is free and clear. Filing for personal bankruptcy releases your personal liability. It does not release your business liability. In this sense, if there are assets of value in your business, they can still chase those if the loan doesn’t get paid."]},{"component":"p","children":["In cases of personal bankruptcy, I’ve seen lenders allow businesses to continue to operate provided that they continue to make the loan payment as agreed. Then again, I’ve seen others treat the bankruptcy as an event of default, in which case they could attempt to shut you down and liquidate the business assets."]},{"component":"h3","children":["Q: Do I qualify for an SBA settlement if I haven't declared my business bankrupt?"]},{"component":"p","children":["A: The SBA doesn’t require you to file for bankruptcy to undergo the settlement process. While there may be many reasons that business bankruptcy is a good strategic move, it has no bearing on the OIC process and does NOT release you from personal liability."]},{"component":"h3","children":["Q: If I file for chapter 7 bankruptcy, my house is safe, isn’t it?"]},{"component":"p","children":["A: It's best to speak to a bankruptcy attorney about this, but in general, if there’s a lien on your home before bankruptcy, it will be there after bankruptcy. The only exception would be if there were no equity in the home. I’ve helped a number of clients over the years to negotiate a lien release following a personal chapter 7 bankruptcy discharge."]},{"component":"h3","children":["Q: My bankruptcy attorney says I should choose the bankruptcy route over SBA settlement. Isn't bankruptcy quicker and easier?"]},{"component":"p","children":["A: Both routes have their pros and cons and suit different circumstances better. My advice is to do your research. The best way of doing this is to speak with the experts. Ask a bankruptcy attorney how the process works, the costs, the time, the hurdles, the rate of success and the future impact. Then do the same with an SBA default expert."]}]},"resource":null,"sponsorship":{"sponsorType":"no-sponsor","name":null,"thumbnail":null,"bio":null,"slug":null,"status":null,"social":{"website":null,"linkedin":null,"twitter":null,"facebook":null}},"thumbnail":{"path":"https://staging.business.com/images/content/5dc/047af7b437483068b4572/1500-0-","caption":"fizkes / Getty Images","isBlurred":false},"bestPicks":{"title":"The Best Background Check Companies of 2021","widgetSection":{"__typename":"SectionWidget","widget":{"widgetId":"10728"}},"bestPicksSection":{"__typename":"SectionBestPicks","bestpicks":[{"fullTitle":"Best for Small Businesses","bullets":["Preset and customized plans","Easy-to-use online portal","Online candidate consent tool"],"isFeaturedBestPick":false,"isJumpLink":true,"tabTitle":"Best for Small Businesses","review":{"isReview":true,"adsense":false,"canonical":"https://staging.business.com/reviews/good-hire/","review":{"fullReview":"GoodHire offers pre-employment screening services to businesses of all industries and sizes. Its background checks comply with the Fair Credit Reporting Act. With its easy-to-use online portal, transparent fees and customization features, GoodHire is our pick as the best background check company for small businesses. Although it serves businesses (and nonprofits) in a variety of industries, GoodHire is especially useful for companies in the construction, healthcare, nonprofit, retail, staffing and technology industries.
\r\nSetting up a background check is extremely easy with GoodHire. Once your company is verified – a process that typically takes one day – you can order and review all background checks from the company's online portal. When you order a background check, GoodHire uses an e-consent tool that obtains the candidate's permission electronically. All final reports are saved in GoodHire's online portal.
\r\nBusinesses can run as many – or as few – background checks as necessary. GoodHire clearly displays the pricing and turnaround time for its services on its website. You may be able to negotiate with GoodHire for custom rates and pricing, though, especially if your business conducts a high volume of screenings.
\r\nHere's more about the three screening packages GoodHire offers.
\r\nGoodHire's Standard and Premium plans are subject to additional third-party fees, dependent upon county courts, employer verification and education verification. However, GoodHire won't charge you these fees without your permission. All new users are subject to a one-time setup fee of $49.99 for account verification.
\r\nWhichever plan you choose, you can customize a background check with GoodHire's add-on capabilities, which include identity checks, advanced criminal and civil records searches, verifications, motor vehicle records checks, employment credit reports, international checks, drug screenings, healthcare sanctions, and ongoing alerts. These capabilities make it easy to modify each background check to fit your exact business needs.
\r\nTo learn more about GoodHire's pre-employment background screenings, you can view a demo on GoodHire's website. You can reach customer support by phone, email or online chat. When we contacted the company, posing as a small business owner, representatives responded promptly with thorough answers to our questions, even providing links to additional resources and information.
"},"url":"https://www.goodhire.com/","docType":"service","title":"GoodHire","thumbnail":{"path":"https://staging.business.com/images/rz/5d0bd2899c658aea2b8b4593/goodhirefin.png"},"pricing":{"isCapped":false,"isFeatured":false,"primary":true,"selected":"widget","widgetId":"10728","widget":{"id":"10728","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://www.goodhire.com/","name":""}}}},{"fullTitle":"Best for Very Small Businesses ","bullets":["Industry-specific options"," Transparent pricing","User-friendly reports via WebASAP"],"isFeaturedBestPick":false,"isJumpLink":true,"tabTitle":"Best for Very Small Businesses ","review":{"isReview":true,"adsense":false,"canonical":"https://staging.business.com/reviews/infomart/","review":{"fullReview":"With its transparent pricing, easy-to-use online portal, industry-specific screenings and no minimum requirements, InfoMart is our pick as the best background check company for very small businesses. InfoMart provides background checks for a wide variety of businesses, particularly in the automotive, education, finance, food service, healthcare, hospitality, manufacturing, retail, sharing economy, sports and entertainment, staffing, and transportation industries. If you are a startup or very small business looking to screen your first job applicants or new hires, you may need a little extra assistance, and InfoMart can provide just that.
\r\nOne of InfoMart's best features is its pricing and screening flexibility. In addition to preset screening packages and add-on features (listed below), InfoMart offers screening recommendations based on industry and employee type, simplifying the process of determining what screenings you need. It lists all its pricing (even third-party fees) transparently on its website, so you know exactly how much you'll spend on each report. InfoMart does charge a $49.95 setup fee, but it requires no contracts or minimum number of screenings.
\r\nAlongside the preset plans, you can order a variety of other screenings for additional costs and third-party fees. Unlike many competitors, InfoMart breaks down these costs, telling you exactly what you will be charged.
\r\nThe flexibility of InfoMart's background screening services makes it ideal for very small businesses that may have unique screening needs. To screen a candidate, you only need to fill out their name, email and location of employment. Once the candidate accepts the invitation by email, they provide their own personal identifying information for InfoMart to screen. This reduces the possibility of you filling out incorrect information and delaying the results.
\r\nInfoMart returns most background check results to you via WebASAP in less than two days. The WebASAP portal allows you to customize your services, search and sort applicant profiles, and save and view notes on each applicant. This mobile-optimized system is easy to use and ideal for startups and very small businesses.
\r\nWe contacted InfoMart's support team to ask questions about its services and test its customer support. Although InfoMart does not have a demo, its agents did offer to explain how to use the portal over the phone. If you have any questions about the screening process, you can contact a representative by phone, email or live chat. You can also access InfoMart's resource library and blog.
"},"url":"https://www.infomart-usa.com/","docType":"service","title":"InfoMart","thumbnail":{"path":"https://staging.business.com/images/rz/5f5b82d69c658aeb2e8b4567/InfoMart.png"},"pricing":{"isCapped":false,"isFeatured":false,"primary":false,"selected":"widget","widgetId":"10728","widget":{"id":"10728","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://www.infomart-usa.com/","name":""}}}},{"fullTitle":"Best for Self-Service","bullets":["3 screening packages","Convenient online portal","Most reports available in one day"],"isFeaturedBestPick":false,"isJumpLink":true,"tabTitle":"Best for Self-Service","review":{"isReview":true,"adsense":false,"canonical":"https://staging.business.com/reviews/sterling/","review":{"fullReview":"Sterling offers a variety of pre-employment screening options. The self-service division of the company, SterlingNOW, is especially convenient for small and midsize businesses that want to order quick, reliable background checks on their own terms, and it's most beneficial for those that need less than 100 checks per year. With its online portal, customizations and fast results, this agency is our pick as the best background check company for self-service.
\r\nTo run a report, you need to submit your business information, including the legal name of your company, to SterlingNOW. (Federal regulations require that your business is credentialed to request background screenings.) Once your account is set up, you can order the screenings you need.
\r\nSterlingNOW offers three screening packages that you pay for on a per-report basis. You may incur additional fees, like court processing fees, for some states.
\r\nYou can add on extra services, like a driver's record check for $9.95 each, and education or employment verification for $19.95 each. Custom packages are available.
\r\nSterling also offers advanced services, like credit reports, drug and health screenings, executive investigations, fingerprinting, global checks, motor vehicle records, social media searches, workforce monitoring, and COVID-19 health tests. It conducts extensive verifications, like professional license and certification verifications, military employment verifications, and professional reference checks. The comprehensiveness of Sterling's capabilities makes it a convenient one-stop service for businesses seeking a pre-employment screening agency.
\r\nYou can access a demo, FAQs, the Sterling blog, webinars and case studies on the company's website. You can reach customer support by phone or web chat. When we contacted Sterling's support team to ask about its services and test its customer support, its representatives were helpful and polite.
"},"url":"https://www.sterlingcheck.com/","docType":"service","title":"SterlingNOW","thumbnail":{"path":"https://staging.business.com/images/rz/5d4494027b4374d3768b4595/SterlingOne.png"},"pricing":{"isCapped":false,"isFeatured":false,"primary":true,"selected":"widget","widgetId":"10728","widget":{"id":"10728","cta":"Compare Quotes","isExclusive":false},"affiliate":{"cta":"Visit Site","link":"https://www.sterlingcheck.com/","name":""}}}},{"fullTitle":"Most Affordable Background Check Company","bullets":["Pay-as-you-go packages","No monthly fees","Low setup fee"],"isFeaturedBestPick":false,"isJumpLink":true,"tabTitle":"Most Affordable","review":{"isReview":false,"adsense":false,"canonical":"https://staging.business.com/reviews/accuratenow/","review":{"fullReview":"As a division of Accurate Background, AccurateNow is an affordable, FCRA-compliant background check service for small and midsize businesses. It is our pick as the best background check company for those on a budget. It offers pay-as-you-go plans; you don't need to meet any minimums or pay monthly fees. This is ideal for very small businesses that need to conduct background checks without being locked into a commitment.
\r\nGetting started with AccurateNow is quick and easy. You simply register your account, pay a one-time setup fee of $25 and sign an electronic agreement. You can begin ordering reports after you've been approved. You can access and order each background check through AccurateNow's mobile-friendly candidate and recruiter portals, and reports are typically available to view within a few days, depending on the package you select.
\r\nAccurateNow offers three different background check packages – Basic, Standard and Premium. Each plan charges on a per-report basis and is subject to applicable fees, such as New York statutory fees, statewide statutory fees, international searches and third-party verification fees.
\r\nPremium Plan
\r\nAccurateNow offers custom packages and elective add-ons like education and employment verification, motor vehicle reports, professional license verification, and federal criminal searches for $9.95 each. If you unearth troubling information and need to inform a candidate that they won't be moving forward in the employment process, AccurateNow can distribute pre-adverse and adverse action letters for $5. AccurateNow's add-on searches may have restrictions (and additional third-party fees may apply), but as we found in our research, AccurateNow charges less for these services than its competitors do.
\r\nAccurateNow doesn't offer a demo that explains how the service works, but you can reach customer support by phone and email. To test the customer service, we contacted AccurateNow, posing as a small business owner interested in background check services. Overall, we were satisfied with the customer service. We received timely responses to our questions and further information on how to set up an account.
\r\nOctober 2020: To help employers with employee onboarding during the pandemic, Accurate Background recently announced the launch of the Accurate COVID-19 Employer Resources Hub. The hub includes resources to support employers, including court closure details, EEOC information, financial resources, health information, legislative updates, articles, e-books and webinars, to name a few. Additionally, Accurate is making an active RNA test available to screen for COVID-19. These resources are especially beneficial for small business owners who want to maintain a compliant, safe onboarding process during the pandemic.
\r\nThe cost of conducting a background check varies greatly, depending on the provider you select and the screenings you want conducted. Some background check companies provide their pricing online, but many do not, meaning you'll need to contact those companies for a price quote. Nearly every company we reviewed offers discounts for high volumes of reports.
\r\nSome background check providers offer preset packages with specific screenings (e.g., Social Security number traces, criminal history searches), whereas others offer a la carte options so you can select the individual screenings you want.
\r\nMost of the services we evaluated offer multiple screening packages, typically ranging from basic to premium. The specific price and the services included in each plan vary by provider. We compiled an average of the types of checks typically included in basic, mid-tier, and premium plans and the average costs for those plans.
\r\n