If you have received a 60-day notice from the Small Business Administration (the “SBA”) that your debt will be submitted to the Department of Treasury for collection, you want to take quick action to resolve your liability with the SBA. Once this has been turned over for Treasury collection, administrative fees are added to the obligation and it can become more difficult to settle. Here are some tips for submitting an offer in compromise package with the SBA:
- The settlement amount needs to be reasonable. The SBA does not accept nominal offers. The SBA typically will not consider offers for less than $5,000. The settlement amount should be reasonable compared to the amount owed. Also, the amount should be reasonable when compared to what the SBA could collect against you over time or in a bankruptcy scenario.
- Offer a lump sum. Your settlement offer is more likely to be accepted if you offer a lump sum that is reasonable and payable in a quick period as opposed to small monthly payments over time.
- Submit all the required documents. Typically, an offer in compromise package will require you to complete a financial statement from the SBA and other requirements including a clear statement of the source of the settlement funds. The SBA also typically requires two years of tax returns (business and personal), recent bank statements and recent paystubs. Your offer is more likely to be accepted if all required documents are timely submitted.
- Provide a financial statement that is clear. If you submit a financial statement to the SBA and it is confusing, the SBA is not likely to accept your offer. The SBA needs to have a clear understanding of what your personal assets and liabilities are to understand if the offer is reasonable.
- Explain your circumstances. The SBA will ask you to provide facts to support why your offer should be accepted. This explanation is your opportunity to provide the SBA your narrative of what happened with your business or other endeavors that support the reasonableness of this offer. You should make sure your personal narrative is precise and to the point. The SBA is reviewing many offers and has limited time to review each file, so it should be clear as to why this offer is reasonable and should be accepted.
About DelCotto Law Group
DelCotto Law Group is Kentucky’s asset preservation and business restructuring law firm known for its commitment to the lifetime success of its clients. DLG serves Kentuckians with complicated financial matters, especially in the areas of bankruptcy and complex litigation. For more information please call (859) 231-5800, email [email protected] or reach us on our contact page.