Warning Bulletin: PRIORITY ALERT
SBA default poses major new threat to your personal credit – Here’s what we know.
An ominous new threat.
In the last 30 days Second Wind Consultants has identified a dangerous policy shift confronting guarantors in SBA default.
The SBA, with no formal announcement, has taken an aggressive and threatening new stance against guarantors of defaulted loans.
We have identified an ominous pattern of activity and can now confirm that the SBA has begun reporting “Charged Off” SBA debt to the major credit reporting agencies as default on a personal loan.
The impact on your personal credit, and the aggressive nature of this shift cannot be under-estimated.
The stakes have risen.
There is now tremendous personal risk involved with SBA default, as it will be nearly impossible to finance any kind of transaction with hundreds of thousands or even millions of dollars in business debt reported on a personal credit report.
At Second Wind, we are vigilant in keeping all aspects of commercial debt on our radar at all times– including any and all changes or amendments in policies or procedures in the inner workings of federally backed loans. Previously unreported anywhere, this movement represents a titanic shift unlike anything we’ve seen in the 64-year history of SBA.
Is this legal?
Is it even legal to convert a business debt into a personal credit issue? In our professional opinion, this is an extremely grey area and suggests why we had to detect this shift below the radar, with no formal announcement. In fact, at this moment, we cannot determine what specific policy has changed, or even which agency decided to change it. We believe that such a policy change happening in the shadows reflects just how aggressive it is. If what we are seeing is the establishment of new precedent, these actions will re-define the entire nature of the borrower / guarantor relationship.
There have always been some risks of SBA loan “charge off” being reported to credit agencies by the commercial lender. The SBA however, has not historically done so itself. In the past, when the servicing bank submitted a defaulted loan back to the SBA, SBA would make attempts to collect, and ultimately push uncollected debt to the Treasury Offset Program. Treasury would make its own attempts to collect. From there, default would certainly destroy your business credit, but personal credit would go unaffected.
All that has changed. Now, when your loan is “charged off” and the transfer to Treasury begins, the default is reported and your personal credit is ruined.
Currently the best response is to file a dispute with each credit bureau regarding the entry (links below).
If that fails, file the dispute again. And again. Essentially, spamming the record off of your credit report.
You could also consider hiring a credit repair agency.
Your best option: A better way.
Ultimately, your best option is to get ahead of the problem and dispose of your SBA obligation favorably. At Second Wind, we designed the nation’s first defaulted SBA loan resolution program 35 years ago. We’ve been successfully eliminating the majority of defaulted SBA loan obligations ever since; freeing both the business and the owner to succeed once again, while reducing your personal guarantees to affordable losses. The discharged debt does not follow you to the Treasury. It ends here.
Before an SBA default ruins your personal credit, an appropriate resolution strategy is your most potent option. We accomplish positive conclusions with an extremely high success rate – with virtually EVERY situation resulting in a positive conclusion.
In the face of increasingly aggressive SBA and Treasury policy, we can show you a better way.