SBA Loan Defense Attorney Serving New York and Long Island
When a business defaults on an SBA loan, the consequences do not stop at the business. Most SBA loans require a personal guarantee — which means the moment the business cannot pay, the SBA can pursue the owner's personal assets, home equity, and bank accounts. For businesses that borrowed through the COVID-era EIDL program, the collection timeline is already underway for many borrowers who have not yet taken any action.
Aronow Law P.C. has represented New York business owners in SBA loan default, EIDL disputes, and personal guarantee enforcement for 23+ years — currently ranking among the top SBA defense attorneys in the country for search terms that matter to borrowers in distress. No Nassau County competitor offers a comparable depth of practice in this area.
SBA Loan Default Can Trigger Personal Guarantee Enforcement — We Address Both
SBA Offer in Compromise: The Official Settlement Program Most Borrowers Don't Know Exists
EIDL Loan Defense for COVID-Era Borrowers Now in Default or Facing Collection
SBA Defense Handled Alongside MCA Defense and Business Bankruptcy in One Engagement
Free Consultations With No Time Limit
The Personal Guarantee Problem: Why SBA Default Is a Personal Crisis, Not Just a Business One
Most SBA 7(a) loans and many EIDL loans over $100,000 require the business owner to sign a personal guarantee. That signature means the loan obligation does not belong solely to the business — it belongs to the owner personally. When the business defaults, the SBA or its lender can pursue the owner's personal bank accounts, investment accounts, home equity, and other personal assets to satisfy the outstanding balance.
This is the fact that catches most SBA borrowers off guard. They structured the loan through the business, believed the business was the borrower, and assumed that a business failure — painful as it is — would not follow them home. The personal guarantee changes that calculus entirely.
Acting before the SBA escalates collection to the personal guarantee level preserves more options. A negotiated resolution through the SBA Offer in Compromise process, or a structured defense strategy, can limit or eliminate personal exposure if pursued before the SBA has initiated Treasury referral or personal asset collection.
SBA Defense Services at Aronow Law
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SBA Offer in Compromise — Settle the Loan for Less Than the Full Balance
The SBA Offer in Compromise is an official federal program — not a workaround — that allows qualified borrowers to settle a defaulted SBA loan for less than the outstanding balance. To qualify, a borrower must demonstrate that the offered amount represents the maximum the SBA can reasonably expect to recover given the borrower's financial circumstances — income, assets, liabilities, and the value of any collateral.
The OIC process requires detailed financial documentation and a formal application submitted to the SBA or its lender, depending on whether the loan has been referred to the Treasury Department for collection. Errors in the application, incomplete financial disclosure, or improper valuation of assets are the most common reasons OIC applications are denied. Aronow Law prepares and submits OIC packages with the documentation required to support a successful resolution.
EIDL Loan Defense — COVID-Era Borrowers Facing Collection
The SBA's COVID-19 EIDL program distributed over $390 billion to small businesses between 2020 and 2022. Many of those borrowers are now in default, deferral expiration, or active collection. EIDL loans under $100,000 were not personally guaranteed — meaning the SBA's recourse is limited to business assets for those borrowers. EIDL loans over $200,000 carry personal guarantees and are subject to full personal guarantee enforcement.
EIDL collection timelines differ from standard SBA 7(a) loans. The SBA has referred significant numbers of delinquent EIDL accounts to the Treasury Department's Bureau of the Fiscal Service for collection — triggering wage garnishment, tax refund offset, and federal benefit offset without a court order. Aronow Law handles EIDL loan defense for borrowers at every stage of the collection timeline, from initial default through Treasury referral.
For businesses struggling to repay outstanding EIDL debt, Aronow Law also evaluates available
SBA loan restructuring and settlement options, including repayment arrangements and potential negotiated resolutions where permitted by the SBA or Treasury.
Personal Guarantee Defense — Limiting Exposure When the Business Cannot Pay
When a business default triggers personal guarantee enforcement, the owner's personal financial picture becomes the SBA's next focus. Aronow Law evaluates the scope of the personal guarantee, challenges enforcement where procedural or legal grounds exist, and negotiates personal guarantee settlements as part of or separate from the underlying business loan resolution. In some cases, a personal bankruptcy filing is the most effective tool for limiting personal exposure — and Aronow Law handles that within the same engagement.
The SBA Offer in Compromise: What It Is
and Who Qualifies
The SBA Offer in Compromise allows a borrower who cannot repay a defaulted SBA loan in full to propose a lump-sum settlement based on demonstrated inability to pay. It is not available to every borrower — the SBA evaluates each OIC against the realistic recovery it could obtain through continued collection, enforcement of collateral, and personal guarantee pursuit.
Qualifying factors that support an OIC approval:
- Documented inability to repay the full loan balance from current income and available assets
- Liquidated or insolvent business with limited remaining collateral value
- Personal assets insufficient to cover the remaining balance even with full personal guarantee enforcement
- Demonstrated good faith — the borrower has not hidden or transferred assets to avoid collection
- The offered amount is equal to or greater than what the SBA could realistically recover through continued collection
The OIC process is documentation-intensive. Aronow Law prepares the financial disclosure package, values assets correctly, and structures the offer at an amount the SBA can approve — balancing the borrower's goal of a reduced settlement against the SBA's standard for what constitutes a reasonable recovery.
EIDL Loans and SBA 7(a) Loans: Understanding the Difference in Default
Not all SBA loans work the same way in default. The program under which the loan was issued affects the enforcement timeline, the personal guarantee exposure, and the resolution options available.
SBA 7(a) loans — the standard small business loan program — are typically made through private lenders with an SBA guarantee. When a 7(a) loan defaults, the lender calls the SBA guarantee and the SBA assumes responsibility for collection. The SBA then pursues the borrower and any personal guarantors directly.
EIDL loans were made directly by the SBA — not through a private lender. EIDL loans under $100,000 have no personal guarantee requirement, limiting the SBA's recourse to the business. EIDL loans over $100,000 carry personal guarantees. EIDL loans over $25,000 required collateral. The collection pathway for defaulted EIDL loans runs through the SBA's Office of Disaster Assistance and, for referral cases, the Treasury Department's Bureau of the Fiscal Service.
Understanding which program applies to your loan determines which resolution tools are available and how urgently each needs to be pursued.
SBA Defense and MCA Defense: Often the Same Business, Both at Once
Business owners who have defaulted on SBA loans frequently have other business debt problems running simultaneously — merchant cash advance obligations, personal credit card debt used to fund the business, or a business bankruptcy consideration. These situations are connected, and resolving one while leaving the others in place produces an incomplete outcome.
Aronow Law handles SBA loan defense,
MCA defense, and
business bankruptcy
in a single engagement. Clients who are managing multiple layers of business debt do not need separate attorneys for each one.
Best Decision I made was to call Aronow Law and I received the Best Outcome!! Malini is an outstanding advocate for those navigating the legal system. Knows her stuff. Aronow Law provided swift problem free assistance. My experience working with this firm has been awesome. So very thankful. Would tell everyone to call Aronow Law if you are in need of legal services. You'll be very happy you did.
Kobin W.
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This law firm is the best !! I can’t express how above and beyond they went to help. My grandmother saved her house ! Because of them a house she’s been in since she was a baby is now hers to keep and she’s 80 years old….. They went above and beyond answering any questions although we got frustrated at times they never ever disrespected us and keep to professional always !!! Thanks so luv from the Campbell family :)!
Nanamilan2010
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Best decision I ever made. They did an amazing job helping me through this process always answering my questions and helping me through every single step along the way explaining everything to mean. If you are ever looking for an attorney to represent you in the bankruptcy process, he is the one.
Merlo M.
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Suhrob s.
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Frequently Asked Questions About SBA Loan Defense in New York
How do I settle an SBA loan in New York?
The primary settlement mechanism for a defaulted SBA loan is the SBA Offer in Compromise — a formal application process in which the borrower proposes a lump-sum settlement based on demonstrated inability to repay the full balance. The OIC must be supported by complete financial disclosure and asset documentation. Aronow Law prepares and submits OIC packages for New York business owners and structures the offer at an amount the SBA's guidelines support. For loans already referred to the Treasury Department, a parallel process through the Treasury's compromise program may apply.
Can a lawyer help me settle my SBA loan?
Yes — and the complexity of the OIC process makes legal representation a significant advantage. The SBA evaluates every OIC against its own assessment of what it could recover through continued collection. A properly documented OIC that correctly values collateral, accounts for personal guarantee exposure, and demonstrates genuine inability to pay is more likely to be approved than one submitted by a borrower without legal guidance. Aronow Law has handled SBA loan settlements for New York business owners for 23+ years.
What happens if I default on an SBA loan with a personal guarantee?
The SBA's collection effort shifts to you personally. Personal bank accounts, investment accounts, home equity, and other personal assets become subject to collection to satisfy the outstanding loan balance. The SBA will typically conduct a personal financial review — requesting tax returns, bank statements, and asset documentation — before determining how aggressively to pursue personal guarantee enforcement. Acting before that review is complete — with a negotiated OIC or other defense strategy in place — preserves more options than waiting for the SBA to make the first move.
Can you settle an EIDL loan?
Yes. EIDL loans are subject to the SBA Offer in Compromise process and, for accounts referred to the Treasury, the Treasury Department's compromise program. The resolution options available depend on the loan amount — loans under $100,000 have no personal guarantee, which limits the SBA's leverage and may affect the settlement calculus — and how far collection has progressed. Aronow Law handles EIDL loan defense and settlement for borrowers at every stage, from initial default through active Treasury collection.
What is the SBA loan default attorney Long Island businesses should call first?
Aronow Law P.C. is based in Woodbury, NY — Nassau County — and has represented Long Island business owners in SBA loan default and EIDL disputes for 23+ years. The firm currently ranks among the top SBA defense attorneys nationally for the search terms Long Island business owners use when they find themselves in default. The consultation is free, has no time limit, and Darren takes the call directly.
What is the difference between an SBA loan default and a Treasury referral?
When an SBA loan defaults, the SBA initially handles collection directly — or through the lender, in the case of 7(a) loans. If the borrower does not respond or a resolution is not reached within a certain timeframe, the SBA refers the account to the U.S. Treasury Department's Bureau of the Fiscal Service for collection. Once referred to to the Treasury, additional enforcement tools become available — including administrative wage garnishment, federal tax refund offset, and offset of federal benefits — without a court proceeding. Resolving the default before Treasury referral generally produces better outcomes and more settlement flexibility.
The SBA Does Not Stop at the Business. Neither Do We.
If your business has defaulted on an SBA loan or EIDL obligation — or if you have received a demand letter, a notice of default, or a Treasury referral — the time to act is now. Aronow Law serves Nassau County and Long Island business owners from the firm's Woodbury, NY office, handling SBA defense alongside MCA defense and bankruptcy in a single engagement. The consultation is free and has no time limit.
