13 CFR 140.2 -- What is a debt and how can the SBA collect it through offset? (2024)

FAQs

13 CFR 140.2 -- What is a debt and how can the SBA collect it through offset? ›

(b) SBA may collect past-due debts through offset by using any of three procedures: administrative offset, salary offset, or IRS tax refund offset. A past-due debt is one which has been reduced to judgment, has been accelerated, or has been due for at least 90 days.

An offset is when the federal income tax refund you would have received is used to pay all or a portion of a debt owing to a federal or state agency. If the full amount owed is not collected in one year, future offsets may be done to satisfy your debt.

The Treasury Offset Program (TOP) collects past-due (delinquent) debts (for example, child support payments) that people owe to state and federal agencies. TOP matches people and businesses who owe delinquent debts with money that federal agencies are paying (for example, a tax refund).

Non-judgment debts are enforceable for ten years; judgment debts are enforceable beyond ten years. You will be notified of SBA's decision at least 30 days before any offset deduction is made.

Assuming there is still an amount due that cannot be paid in full, the SBA will entertain an OIC. The SBA offers an OIC program for borrowers facing financial hardship. This program allows eligible borrowers to settle their debt for less than the full amount owed, provided certain criteria are met.

The rule of offset refers to the process of offsetting loans or receivables from partners against their capital balances before any cash distributions are made.

A. Setoff is an equitable right of a creditor to deduct a debt it owes to the debtor from a claim it has against the debtor arising out of a separate transaction.

When you are going to get a federal payment, we search the database to see if you owe an overdue debt. If your debt is in the database, we hold back money from the payment to pay your debt. (The official words for holding back money are "offsetting the payment" or "administrative offset.")

Offset is the general right of one party to recover a debt owed by another through a deduction from monies owed by the first party to the second. Basically, there are two types of offsets: setoffs and recoupments.

Your debt is negotiated down, and you pay less than you owe. The creditor forgives the remaining balance in a transaction called a settlement. Debt consolidation combines all of your debt into one loan with a single monthly payment, often at a reduced rate of interest.

What is the SBA 5 year rule? ›

If a business hasn't been in business for five years, multiply its average weekly revenue by 52 to determine its average annual receipts. SBA calculates annual receipts in accordance with 13 CFR 121.104.

Your Business Assets Will Be Seized and Liquidated

When your defaulted loan goes to collections, your lender will recoup the debt. They'll start by seizing the collateral you secured your loan against. In many cases, that means taking control of your business assets.

If you suffered through an SBA loan default you may be subject to an administrative offset. The administrative offset consists of primarily a garnishment of your federal benefits, the most common of which is Social Security. It is another weapon that the government uses to make your SBA loan problems worse.

Business owners defaulting on their SBA loan can apply for loan forgiveness, but that does not guarantee the SBA will approve the request. It is more commonly referred to as an "offer in compromise". The SBA evaluates your case and discusses the matter with the lender.

The lender knows the SBA only guarantees a portion on the loan anyway, so they may be willing to forgive part of it. The SBA has something called an offer in compromise that might allow you to get forgiveness on part of your loan. However, an offer in compromise is only an option after the loan is in default.

Yes, you are correct that collateral is required for EIDL loans over $25,000. For loans between $25,000 and $500,000, the SBA will file a UCC-1 lien on your business assets. For loans over $500,000, the SBA will also file a real estate lien on your home.

Offset is the general right of one party to recover a debt owed by another through a deduction from monies owed by the first party to the second.

The law says that Treasury may withhold money to satisfy an overdue (delinquent) debt. The official term for withholding money from a payment is "offset" or "administrative offset." The program that offsets federal payments for overdue debts is the Treasury Offset Program (TOP).

The “Notice of Intent to Offset” tells you that you have a delinquent debt and part or all of your federal payments will be seized by the government. Federal tax refunds are typically offset by the IRS, although they may also accept other forms of federal payments.

An offset loan is a type of lending arrangement, usually for a mortgage, in which a borrower also maintains a savings account with the lender. Instead of receiving interest on the savings account, the interest payment due on the loan is calculated only on the net balance of the loan minus the savings account.