SBA Offer in Compromise Attorney Serving New York and Long Island

The SBA Offer in Compromise is an official federal program that allows qualified borrowers to settle a defaulted SBA loan for less than the full outstanding balance. It is not a loophole or a workaround — it is a formal process built into the SBA's own guidelines, available to borrowers who can demonstrate that the offered amount represents the maximum the SBA can realistically expect to recover. Many New York business owners who qualify never pursue it because they do not know it exists.



Aronow Law P.C. prepares and submits SBA Offer in Compromise packages for Long Island and New York business owners, structuring each offer within the SBA's documented approval criteria.

The SBA OIC Is an Official Federal Settlement Program — Not a Workaround   •   Available to Borrowers Whose Businesses Cannot Repay the Full Loan Balance   •   Offer Must Represent the Maximum the SBA Can Reasonably Recover   •   SBA OIC Is Distinct From the IRS Offer in Compromise — Different Program, Different Rules   •   Free Consultations With No Time Limit

SBA OIC vs. IRS OIC: Two Different Programs

Many borrowers who hear "Offer in Compromise" assume it refers to the IRS debt settlement program — a separate process for resolving unpaid federal taxes. The SBA Offer in Compromise is a different program entirely, administered by the Small Business Administration under its own Standard Operating Procedure for loan compromise and adjustment.



The IRS OIC resolves federal tax liabilities. The SBA OIC resolves defaulted SBA loan obligations — including 7(a) loans and, in applicable cases, EIDL loans. The eligibility criteria, documentation requirements, submission process, and approval standards are distinct. Legal representation in an IRS OIC does not translate directly to SBA OIC practice. Aronow Law handles SBA loan compromise specifically, as part of the firm's business debt defense practice.

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Who Qualifies for an SBA Offer in Compromise

The SBA evaluates every OIC against one central question: does the offered amount represent the maximum the agency can realistically recover from this borrower, given the full financial picture?


Qualifying factors that support OIC approval:



  • The business has closed, is insolvent, or cannot generate sufficient revenue to repay the loan balance
  • The borrower's personal assets — after accounting for exempt assets and necessary living expenses — are insufficient to satisfy the full balance through personal guarantee enforcement
  • Collateral pledged against the loan has been liquidated or has a value that, combined with personal assets, does not cover the outstanding balance
  • The borrower has acted in good faith — no hidden asset transfers, no fraudulent conveyances, no attempt to shelter assets before the OIC submission
  • The offered lump sum is equal to or greater than what the SBA could recover through continued collection, litigation, and full personal guarantee enforcement


The SBA does not accept OICs from borrowers who have the ability to repay but prefer not to. The standard is financial reality, not preference. Demonstrating that reality convincingly — through complete, accurate, and well-organized financial disclosure — is what the application process requires.

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In many states, one attorney or a title company handles the entire closing. New York operates differently. Buyers have their own attorney. Sellers have their own attorney. The lender has its own attorney. Each represents their own client's interests, and those interests are not always aligned.



A buyer whose attorney is also the seller's attorney — or who is relying on the title company to catch problems — has no independent advocate in the transaction. In a state where real estate documents carry long-term legal obligations, that is a meaningful gap. Aronow Law represents one side of the transaction and one client's interests only.

Understanding how agreement—or conflict—shapes the process.

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The SBA OIC Process: Step by Step

Step 1: Financial Disclosure and Asset Review

The foundation of every OIC application is a complete and accurate picture of the borrower's financial situation. Aronow Law conducts a full financial review at the outset — income, expenses, business assets, personal assets, retirement accounts, real estate equity, and liabilities — to determine the realistic recovery the SBA could achieve through continued collection. This analysis determines the offer amount and frames the documentation that supports it.

Step 2: Calculation of the Offer Amount

The offer amount is not arbitrary. It is calculated based on what the SBA could realistically recover from the borrower's available assets and income after accounting for exemptions, living expenses, and the costs of collection. Aronow Law structures each offer to be as favorable as possible to the client while still falling within the range the SBA's own guidelines support. An offer that is too low without documented justification will be rejected. An offer that is higher than necessary costs the client money. The calculation is the most consequential part of the process.

Step 3: Preparation and Submission of the OIC Package

The OIC application submitted to the SBA or its lender — depending on whether the loan has been referred to the Treasury Department — must include the formal compromise application, a complete personal financial statement, supporting financial documentation, a narrative explaining the circumstances of the default, and any relevant business financial records. Incomplete submissions are a primary cause of OIC denials. Aronow Law prepares the full package before submission and confirms that every required element is present and accurately documented.

Step 4: SBA Review and Negotiation

The SBA reviews the OIC against its own assessment of the borrower's financial situation and the collectible amount. The SBA may accept the offer, reject it, or counter with a higher amount. If the SBA counters, Aronow Law negotiates the response — providing additional documentation to support the original offer or evaluating whether the counter-offer is appropriate given the borrower's actual financial position.

Step 5: Approval, Settlement, and Release

When the SBA approves an OIC, the borrower pays the agreed amount — typically as a lump sum, though installment arrangements are sometimes available — and receives a release of the SBA's claim against both the business and the personal guarantor. All liens held by the SBA on business or personal assets are released as part of the settlement. The loan obligation is resolved.

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What Happens if the OIC Is Denied

A denial is not necessarily a final outcome. The SBA may deny an OIC because the offer amount was insufficient relative to the agency's asset valuation, because the financial disclosure was incomplete, or because the SBA believes additional recovery is available through continued collection. Each of these grounds can be addressed.


If the offer was denied on valuation grounds, a revised OIC with corrected asset documentation may be appropriate. If the denial reflects a difference of opinion on collectible amounts, an appeal or supplemental submission may be available. And if the OIC process does not produce a resolution, other defense strategies remain — including personal bankruptcy as a tool to limit personal guarantee exposure.

Aronow Law evaluates the denial, determines what the SBA's objection actually reflects, and recommends the most viable next step.

Frequently Asked Questions About the SBA Offer in Compromise

  • How does the SBA Offer in Compromise work?

    The SBA OIC is a formal application process in which a defaulted SBA borrower proposes a lump-sum settlement based on a documented showing that the offered amount represents the maximum the SBA can realistically recover given the borrower's financial circumstances. The application includes a personal financial statement, supporting documentation, and a narrative explaining the default. The SBA reviews the offer, may counter, and — if the offer meets the agency's guidelines — approves the compromise and releases the borrower and any personal guarantors from further obligation.

  • Do I qualify for an SBA Offer in Compromise?

    Qualification depends on whether your financial situation genuinely prevents full repayment and whether the offered amount represents realistic maximum recovery for the SBA. Borrowers whose businesses have closed or are insolvent, whose personal assets are insufficient to satisfy the balance through personal guarantee enforcement, and who can document that position completely and accurately are the strongest OIC candidates. The fastest way to know whether you qualify is a consultation — Aronow Law conducts a financial review at the outset and provides a realistic assessment of OIC viability before any application is prepared.

  • Is the SBA Offer in Compromise the same as the IRS Offer in Compromise?

    No. They are separate programs administered by different federal agencies under different rules. The IRS OIC resolves unpaid federal tax debt. The SBA OIC resolves defaulted SBA loan obligations. The eligibility criteria, documentation requirements, and approval standards are different. An attorney experienced in IRS OIC matters is not necessarily experienced in SBA OIC matters, and vice versa. Aronow Law handles SBA loan compromise as part of the firm's dedicated business debt defense practice.

  • How long does the SBA OIC process take?

    The timeline varies depending on whether the loan is held by the original lender or has been referred to the Treasury Department, how quickly the financial documentation can be compiled, and how long the SBA's internal review takes. Standard OIC review timelines at the SBA level have historically ranged from several months to over a year in complex cases. Aronow Law manages the submission and follows up with the SBA throughout the review period. Acting before Treasury referral — when the loan is still in the SBA's hands — generally produces a faster and more flexible resolution.

  • What is the SBA Offer in Compromise attorney Long Island business owners should call?

    Aronow Law P.C. is located in Woodbury, NY — Nassau County — and handles SBA Offer in Compromise applications for Long Island and New York business owners. The firm has represented business owners in SBA loan default and OIC matters for 23+ years and currently holds top national rankings for SBA defense search terms. The consultation is free and has no time limit.

The SBA Has a Settlement Program. Let Us Show You How to Use It.

If your business has defaulted on an SBA loan and full repayment is not a realistic option, the Offer in Compromise process may be the most direct path to resolution. Aronow Law serves Nassau County and Long Island business owners from the firm's Woodbury, NY office, handling SBA OIC preparation and submission alongside EIDL defense, MCA defense, and bankruptcy in a single engagement. The consultation is free and has no time limit.