When a government small-business loan goes into default, the lender will try to collect the full amount from the borrower, calling in the SBA’s guarantee only if its efforts to collect fail. The lender has the right to seize the assets the borrower used as collateral to back the loan.

What happens if I can’t repay my SBA loan?

When you get your SBA loan, you’ll sign a personal guarantee. That means that if you fail to repay your loan, your lender can liquidate your assets, garnish your wages and foreclose on your home if you used it as part of your guarantee.

Do I have to pay a business loan back?

After you’ve found a lender, gone through the application process, and received your funds, all you have left to do is spend your funds! Oh yes, and repay your loan. Unfortunately, as you are probably aware, loans are not free money. You have to pay them back.

What happens when a SBA loan goes into default?

What do you have to do to get a SBA loan?

Borrowers owning 20% or more of the business and individuals that hold key management positions are also required to sign a personal guarantee to obtain SBA loans. A personal guarantee is a written promise that says you agree to pay back the loan personally if your business cannot.

Can you get another SBA loan if you settle?

To be clear, regardless of whether you settle or don’t, the chances of getting another SBA loan in the future are not good. The act of settling is NOT the reason why you won’t qualify for an SBA loan in the future. The reason you won’t get another SBA loan is because you failed to repay the debt in full.

How does a SBA loan collector contact you?

First, your lender will contact you via phone and email. You should know that FTC guidelines that restrict how often, when, and how collectors may contact you don’t apply to business loans, so any restrictions on this communication will depend on which state your business operates.