Bankruptcy Attorneys Weigh In on the Best Approach to Making SBA EIDL Loan Payments
If you’ve been following our articles on the Small Business Association Economic Injury and Disaster Loan payments, you know that our team of expert bankruptcy and debt relief lawyers are continuing to follow the latest developments.
In February 2023, we explained the Capital Access Financial System (CAFS) contacted many Denver-area small businesses about their loan due dates. If you’re unfamiliar with CAFS, this is the website for which you created an account to monitor your loan.
Whether you were contacted yet or not, it’s likely that you have questions about what is going to happen with this loan, as politicians regularly discuss this repayment plan. Can you file bankruptcy on an SBA EIDL loan? Will there be a continued deferment based on a measure passed in Congress? If I am unable to pay back this loan, are there repercussions from the SBA?
Read on to learn the most up-to-date information about your SBA EIDL loan and how we can help, starting with a free consultation.
Wink and Wink’s Strategies and Solutions for SBA EIDL Loan Payment
One of the biggest updates about SBA EIDL loans that we can provide is this: there is hope for every business that accepted one of these loans and is now trying to figure out how to repay it after a challenging few years.
Each business is facing a different scenario, but our law firm has developed key approaches to help guide businesses through potential resolutions.
This all begins with a free consultation from Wink & Wink. Much like any of the services we provide, we listen carefully and respectfully to understand your story, perspective, and all the details you need to share. In short, we build a relationship with you. Next, we get to work, providing our expertise to ensure that the outcome of your circumstances puts you on a better path for the future.
Three Things That May Happen, Related to Your SBA EIDL Loan Payments
Depending on your business’s financial situation, your small business may experience one of the following.
Business owners who are unable to pay back their SBA EIDL loans may face being reported to the Credit Alert Verification System (CAIVRS). CAIVRS is a database of those who have defaulted on Federal loans. This database shares information among other Federal loan programs, including FHA mortgages.
Although we are unclear whether CAIVRS reporting will occur without repayment, we do know that many small business owners will want to avoid ending up in this database, as this will prevent them from Federal loan opportunities in the future. While we continually update you on the latest information related to whether small businesses will be reported to CAIVRS, we can take action to help discharge this loan.
If you are planning to dissolve your business, Wink & Wink can help you with the dissolution, including a strategy to end your liability for your SBA loan. We regularly guide small businesses through business dissolution during bankruptcy proceedings, and we can offer similar guidance and support in terms of the best approach to dissolving your business in a way that is most beneficial for you.
Keep in mind, however, that during this dissolution, there will likely be an accounting of your SBA loan. The SBA could potentially determine that you are personally responsible for your loan based on how you managed these funds. Further, EIDL loans are secured loans if they’re over $20,000, so it is possible that the SBA would have a lien on business assets in the total amount of your unpaid loan. If you try to dissolve your business and personally accept those assets, you would then be considered personally liable for your SBA EIDL loan. We mention this to articulate the fact that you’ll likely need counsel of our expert debt relief lawyersthe to determine the best course of action.
If you plan to continue operating your business and your loan is under $200,000, you may be able to discharge a significant part of your loan in Subchapter 5 bankruptcy. Keep in mind that this loan would be restructured and not completely discharged. If you are a sole proprietor, you can file for bankruptcy on an SBA EIDL loan through Chapter 7 or Chapter 13, as your loan is personally guaranteed, no matter the size.
It becomes clear that there are a number of solutions available, depending on your individual circumstances, your desire to keep or dissolve your business, and the balance of the loan. In all cases, Wink & Wink can find the most empowering financial outcome for you.
Partner with Wink & Wink for Continued SBA EIDL Loan Payment Solutions
Whether you’re trying to determine if you can file for bankruptcy on an SBA EIDL loan, or you’re wondering how to dissolve your business with this loan still outstanding, Wink & Wink will find a solution that will help you find the best path forward.
Wink & Wink continues to monitor all SBA EIDL loan updates to develop the right strategies for our Denver clients. Our bankruptcy attorneys are highly valued for our strategic approach to small business bankruptcy, debt relief, tax debt, and more. We look forward to providing our expertise for your needs.