At Shenwick and Associates, we regularly represent
individuals and businesses facing financial distress, including borrowers who
have defaulted on Small Business Administration (SBA) loans. Over the past
several months, we have observed a marked increase in aggressive collection
activity by the SBA and the U.S. Department of the Treasury against
borrowers and guarantors of defaulted SBA loans.
Heightened Enforcement Activity in Late 2025 and 2026
Beginning in the last quarter of 2025 and continuing into
2026, collection efforts by the SBA and the Treasury have intensified.
These efforts are not limited to letters or informal demands. Instead, we are
seeing the government use a broad range of statutory collection tools,
including:
- Retention
of private collection agencies to pursue defaulted SBA loans;
- Administrative
wage garnishment of up to 15% of a debtor’s wages, without the
need for a court judgment;
- Seizure
of federal tax refunds through the Treasury Offset Program; and
- Offset
of Social Security benefits, with up to 15% of monthly payments
taken from individuals who are personally liable for, or who guaranteed,
SBA loans.
These collection actions are being taken against both
primary obligors and personal guarantors of SBA loans. If you signed a
personal guarantee, your personal income and federal benefits may be at risk.
The “They Won’t Collect” Myth
We recently met with a new client who told us that their
accountant had advised them: “Don’t worry about a defaulted SBA loan—the SBA
isn’t really collecting on those loans.” Unfortunately, that advice is simply
wrong!
Based on our recent experience and the increasing number of
calls we are receiving, it is clear that the SBA and Treasury authorities are
actively pursuing collection of defaulted SBA loans. Assuming that the
government will not act is a mistaken and risky strategy that can result
in wage garnishments, lost tax refunds, and reduced Social Security income.
Take Action Early
If you have defaulted on an SBA loan, or if you personally
guaranteed an SBA loan that is now in default, it is critical to take
proactive steps. Options may exist to address the debt, such as a mitigate
collection efforts, or restructure or resolve the obligation, or a bankruptcy
filing and or a payment plan with Treasry—but those options are often
time-sensitive.
Consulting with an experienced bankruptcy and workout
professional can make a meaningful difference in protecting your income,
your retirement income and your financial future.
If you are facing collection activity related to a defaulted
SBA loan, we encourage you to seek qualified legal advice sooner rather than
later. For those clients or their advisors who have questions with respect to defaulted
SBA loans, please contact Jim Shenwick, Esq.
Jim Shenwick, Esq
917 363 3391
jshenwick@gmail.com
Please click the link to schedule a telephone call with me.
https://calendly.com/james-shenwick/15min
We help individuals & businesses with too much debt!
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