Completing the Offer in Compromise 8 Tab Form

An Offer in Compromise (OIC) is an offer made by a borrower to pay part of what is owed on an SBA loan in exchange for the SBA considering the debt as satisfied or settled. A borrower first has to submit their own OIC to the lender or CDC. Once the lender or CDC agrees to the offer, the offer must then be sent for SBA approval. If SBA approves the Offer in Compromise, the borrower will not be liable for that debt thereafter, and the loan will be classified as “Compromise/Closed”.

After all collateral and assets have been liquidated, there will be times when a borrower still will be unable to pay the entire amount owed on an SBA loan. In this case, a borrower can submit an Offer in Compromise – a monetary offer to settle their debt on the SBA loan for less than the full amount due. This offer must be a reasonable amount compared to the estimated net present value of the projected amount of recovery available through enforced collection. When the liability of the borrower is clear and the SBA can collect fully without protracted litigation or large unrecoverable expenses, there is little basis to settle for less than what is owed…

From the Coleman SBA 7(a) Loan Servicing & Liquidation newsletter – published weekly.

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