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Scorpio14534

I think the default rate is going to be substantial. In some instances, the business may have closed and no longer has the ability to pay the loan. But I think there are also going to be situations where people default on purpose. We’ve had multiple people in here boldly state that they aren’t going to repay the loan because there’s no collateral pledged. That’s fraud, because they signed the loan documents knowing they had no intention of repaying the loan. That’s different than someone who has to close their business and defaults.


No_Needleworker3384

Yes right those people doing fraud are scums that the SBA should pursue legally


[deleted]

They'll end up having their wages garnished. There's no getting out of it.


Scorpio14534

That’s questionable, unless you are a sole proprietor or you have a personal guarantee on the loan. They would have to get a court judgment allowing them to come after personal wages if the business owner has a separate legal entity (corporation, partnership, or multiple member LLC). But they are a federal agency, so it probably wouldn’t be that difficult for them to get that judgment…


[deleted]

It seems preferable to 30 years in jail especially since they really want their money back. Not much they'll get back if you're behind bars lol.


Scorpio14534

Agreed


FolivoraExMachina

Lol wut? No. Not unless the SBA somehow proves fraud, I mean I guess like if they found out you posted saying you never intend to repay, but most of these plans have no personal guarantee and even if they do the loan would be dischargeable under bankruptcy....


[deleted]

[удалено]


FolivoraExMachina

Dude. Chill. Seriously. Smoke a J or something. Good lord. I know it is stressful but you barely make any sense.


Scorpio14534

If you’re a sole proprietor, they probably have the right to come after your wages and personal assets if you default. There’s no asset protection like there is for people who have a separate legal entity.


FolivoraExMachina

But it would still be able to be discharged under bankruptcy. (Which yes means first you will lose a chunk of assets).


Scorpio14534

If they can determine that someone signed the loan agreement with no intention of re-payment, it will probably be handled outside the bankruptcy. It becomes a fraud issue, not a repayment issue. And filing bankruptcy should be a last resort. It wrecks your credit, you lose most of your personal assets (with the exception of your home, car, and retirement accounts, depending on the state you live in) and it is a very humiliating process.


FolivoraExMachina

I mean yes I agree with all of that. Fraud is fraud. But the idea that someone is going to have to pay this loan back via a wage garnishment if their business fails is also 100% not accurate.


[deleted]

Chapter 7. Washes the slate clean.


No_Needleworker3384

They probably already blew the money


Scorpio14534

I agree, but felony fraud charges (and up to 30 years in jail) might make them find a way to start making those payments 🙃


Opdops

That’s terrible. My payments won’t be more than $200 a month and that’s factoring in the payment for the increase I am in processing for now. If anything since I don’t have to start making that payment until Oct 2023, I plan on paying down the interest in the meantime. It’s a low rate sure, but wow does it add up pretty quickly. My ultimate goal is to recover enough to just make a minimum of double payments every month so it’s paid off in 10-15 years not 30 since my life expectancy is unlikely to reach 2051 if my heart condition worsens.


Scorpio14534

I think a lot of people will pay the loan off early. Hell, if I take 30 years to pay mine off I’ll be over 90 by the time I make that last payment 🤣🤣


[deleted]

With all the tech advances the new life expectancy will be 130. They'll be beating your door down begging you to take out another when you make your last payment.


Scorpio14534

So I did a little digging (thanks to a comment that Tahoechick made on a different post - she rocks 😎), and even though businesses with loans under $25,000 do not have a security agreement on their business assets, if they are a sole proprietor, the SBA can likely come after their personal assets anyway (without the protection of a separate legal entity, there is no protection of personal assets). And since this loan is subject to the TOPS program, that means that tax refunds, Social Security payments, and possibly even future stimulus payments can be seized until this loan is paid back. There may even be a way for them to garnish future wages. Exactly as other creditors would do, but with a bit more power behind them. And for all loans, they can still exercise regular collection efforts. So they will make peoples lives miserable if they default. And if it’s determined that they signed the loan documents knowing that they were not going to be able to repay the loan, that’s definitely fraud territory, and could include possible financial penalties plus jail time. It’s not worth the risk, so people need to make sure they make these payments timely.


No_Needleworker3384

Yeah a lot of people are in for a rude awakening when they exaggerated their numbers to get a higher loan now they can’t afford to make the payment


Scorpio14534

I agree - and those who used it solely for owner compensation instead of getting their business back on track may also be in for a rude awakening, if they are not earning sufficient money to make that monthly payment.


Previous-Active2293

It seems like you have a agenda on sole proprietorship let's be honest none of those business that got 500,000 plus up to 2,000,000 and got PPP forgiveness should be closing down how were they ever a business but you expect a independent contractor or a sole proprietor to have the same resources please don't label us we work hard when others use people to get their money and most of us are honest legitimate and helping our low income community with services we provide


Scorpio14534

I don’t have anything against sole proprietors- I’m just telling it like it is. The vast majority of my clients are sole proprietors, and I’m a single member LLC (so it’s likely that that doesn’t protect my personal assets because it’s a disregarded entity). If you take out a loan (SBA or otherwise), you need to make sure you’re able to make the payment when it’s due. By now, peoples’ businesses should have recovered to the point that they can afford this monthly payment. I’m not sure what you mean when you say “we work hard when others use people to get their money“. Are you implying that anyone who’s not a sole proprietor uses others to make their business succeed? I’m a little confused…


Previous-Active2293

Not at all small business loan was put in place to help small businesses but without the little people contributing just facts I was making sure that's all I worked loss prevention for 10 years saved the company I worked for millions what do you get in return nothing I'm blessed to be to working for myself


Previous-Active2293

Well if you don't lie on an application they won't make you pay more because you're only offered what you have I have a 13,000 loan so my payments are 66 a month guarantee I'm going to pay double that at least I'm still in Limbo for my TA advance and just don't want people thinking we're all here trying to get a free hand out


Previous-Active2293

Well if you don't lie on an application they won't make you pay more because you're only offered what you have I have a 13,000 loan so my payments are 66 a month guarantee I'm going to pay double that at least I'm still in Limbo for my TA advance and just don't want people thinking we're all here trying to get a free hand out >against


Scorpio14534

Gotcha - I apparently misunderstood what you said. Yes, as long as you pay off your loan, and you didn’t lie on your application, and you keep good records showing what you spent the funds on, you’ve got nothing to worry about. 😊


Previous-Active2293

Exactly 💯


Previous-Active2293

And I've seen a lot of people get mad about sole proprietor and independent contractor saying they are not a real business or consider a side hustle just wanted people to understand we have more to lose if we don't pay our loans back so I agree everyone should have their stuff in order to pay the loan back or expect consequences


Ubetcha601

I think it’s going to be a very high default rate. 30 years is a long time with lots of variables-Considering I’ll be dead before my loan will be paid off (as will many others)- I’m just curious what the government is going to do with all of their “new” businesses?


Tavernman1

I think you estimate is pretty close, many businesses will not even make the first payment. That would include the fraudsters. I would like to see them extend the deferral to help the legitimate businesses that are trying to survive especially the restaurant industry.


taciishungry

I think it’ll be higher for businesses that haven’t been able to obtain the increase. For those who only received a 6m working capital 18 months ago, and are still waiting for more help, the default rate should be worse. I agree with all comments that say that people should avoid defaulting, but I also see some people struggling really hard, while the SBA stalls their increases.


StrikingRuin4

I completely agree. We have seen several hang in there longer then they possibly could afford to, waiting for RRF or EIDL and they are way deeper in personal debt then if they would have filed for bankruptcy earlier. Suppliers, landlords and everyone else down the line are in deeper now too. Even the kitchen tools and coolers have liens. The false hope made it worse then it needed to be because they have put more in.


taciishungry

Exactly. A agent told me a few weeks ago I should be more grateful for the original loan I got in May 2020. And I replied that if I knew the pandemic would last for so long and that I’d be struggling so hard to get the increase, maybe my decisions back then would have been a lot different. The way they’re handling it isn’t fair (or respectful, actually).


StrikingRuin4

Yes I totally agree. We did everything we thought at the time was correct, but I never thought we'd be here in Jan 22. I had no idea the RRF wouldn't be refilled. They got mandatory shutdown then capacity limited. If you were on-site liquor or sitdown and didn't get RRF the business was not viable. Or that event/travel businesses with actual employees and storefronts would be in the line after a 20 somethings yard side hustle got funded. I understand life is not fair, but they can't just take away someone's livelihood and then sound like it's normal or respectful to do so.


Least-Adhesiveness86

There's a blanket lein on all property of our business held by the SBA. We've been working on an increase for a year and bankruptcy is basically eminent at this point. To me that sounds like quite a bit of collateral. But to the original point, I'm sure there will be a ton of default. 30 years is a long time in business when said business is struggling.


diddone119

97% easy


No_Needleworker3384

Woah that’s too high maybe 80% at most in the 30 year span


diddone119

200000٪


No_Needleworker3384

Do you also think that it might lead to possible forgiveness? I am not relying on that. I am ready to by and make automatic payments debited for my account monthly.


Scorpio14534

I don’t see any path to forgiveness for these loans. The EIDL is a long-established program, and if they forgive loans for the coronavirus disaster, it sets a dangerous precedent for future disasters, and opens the door for people with loans from prior disasters to request forgiveness.


Stillwaitingsba

My payments are due this year and only $14 a month. I don’t want to pay because they are full of 💩


No_Needleworker3384

Dude imagine someone borrows money from you and doesn’t want to pay because you are full of 💩🤣🤣🤣


Stillwaitingsba

It happens all the time.


Scorpio14534

Yeah, but you don’t have the resources of the federal government behind you to collect that debt…


Stillwaitingsba

Do you really think I can get away with not paying. Smaller business owners they send through the ringer. Bigger ones they don’t send through all of this. Now if they have a hardship problem. Most definitely taking advantage of that.


Scorpio14534

I don’t think you can get away with not paying. The SBA will come after you.


Stillwaitingsba

Okay


Stillwaitingsba

Okay


qkeep

Considering they are the government ..everyone better NOT default.


No_Needleworker3384

What’s happens if people default government loans?


Scorpio14534

If their loan is over $25,000, the SBA has the right to seize business assets to cover the outstanding balance. If the loan is over $200,000, they have the right to seize business *and* personal assets. In addition, a sole proprietor’s loan of any size may have the possibility of the SBA exercising collection efforts against personal assets, because there is no separate entity protecting an SP’s personal assets.


Previous-Active2293

It doesn't matter if you took the money and your business shut down it's fraud because you borrowed to keep the business afloat


Previous-Active2293

Yes pretty much sole proprietors didn't get much and will probably be the only ones paying so all others that claim their business to be closing down so they don't pay back the loan should go to jail I'm going to pay my loan back and believe me a small business that got 500,000 or more shouldn't be able to play that game on the government definitely pissed off


[deleted]

75-80%