SBA Loan Resolution
5 Requirements That Shape the Negotiation

An SBA resolution is measured against recoverability, not against the percentage an owner hopes will make the history less expensive.

Every negotiation of this kind turns on five requirements, and the absence of any one of them stalls the file longer than a low offer ever could. Authority, collateral, obligors, proof of deficiency, and a written release form the sequence. The number comes last because the decision maker reads it last.

Authority to Approve the Resolution

The agency loan center assigns 7(a) and Express servicing, CDC and 504 servicing, guaranty purchase, and post servicing actions to distinct tracks, and the Commercial Loan Service Center guidance shows why the person collecting payment is rarely the person who can approve a release. Communications should follow the process that fits the account, not the contact the owner already has.

Months after the last payment, the owner often discovers the file changed hands. After assignment or referral, after responsibility moved to a new desk, old contact details linger in the inbox and produce correspondence with no legal effect. August inquiries wait longer than January ones, in our experience, though no published schedule explains the difference. Simply ask for the submission requirements and the authorized route in writing, since this step is extremely useful and costs nothing.

A broker familiarity with another SBA file establishes nothing about this one. The signature on the guaranty, the note, the notices, and what the ledger shows about the last twelve months are the materials that matter. Often the oldest contact in the inbox is the least useful.

Collateral Accounting Before Any Offer

The agency compromise instructions make collateral liquidation a condition of the process, which reorders the negotiation entirely. The owner who opens with a percentage invites a question about proceeds. The owner who opens with an accounting of recovery invites a discussion of the remainder.

Assemble the record showing what collateral existed, what disposition occurred, and how proceeds were applied, because the decision maker reconstructs the same history with or without the owner help. Where approval was required for a sale, keep the authorization beside the closing documents and the payment record. Missing proceeds and unexplained transfers alter how every later statement is received, and the file that explains them early reads as candid while the file that hides them reads as something else.

Do not move property out of the business to improve the settlement posture. Some owners record transfers in order to shield equipment from the process, and those transfers can raise separate legal issues that dwarf the original balance. Take advice before changing ownership of anything another party claims an interest in, and protect and preserve the proceeds record exactly as the bank statements show it.

The file is complete when a stranger can follow the money. That standard sounds modest. It eliminates most submissions.

Records at the Obligor Level

The agency identifies **Form 1150** with Form 770 or a business financial statement for **each obligor** seeking compromise, and that single requirement defeats the most common shortcut in these files. A company hardship letter never answers the question the guaranty raises. The business and the signer are separate inquiries with separate balance sheets.

Separate business assets from personal assets. Distinguish ownership from pledged collateral. List liabilities with enough detail to show what is owed and whether another creditor claims the same property. Have counsel review and analyze dispositions that preceded liquidation, since an omitted transfer from two years ago (our files suggest the pattern, though no dataset fixes the share) remains visible in bank records the owner forgot existed.

The package should name the source of the proposed payment. Funds offered by a relative or an investor may carry conditions, and those conditions need reconciliation with the proposed release. What the owner discloses, or withholds, in the first submission sets the tone for everything after. Keep the authorizations with the closing documents.

The Number Means Nothing Without the File

The percentage is not the proposal.

A charge off is an accounting entry. Collection continues under a different letterhead, and Treasury servicing is not forgiveness under another name. COVID EIDL balances cannot be forgiven, whatever a solicitation implies. The records should be complete before anything is sent.

An attractive number without a record gives the decision maker no reason to regard the offer as supportable. The authorized route from the first section governs here as well. Whether a 504 debenture file moves faster than a 7(a) file is beyond what these pages establish.

Settlement Review and Independent Counsel

Delancey Street operates as a debt settlement company. Legal work goes to independently licensed counsel. The company offers a free confidential initial review for businesses under MCA pressure, and the Delancey Street initial review tests whether negotiation fits the accounts and the resources behind them.

The broker assurance (which the engagement letter will not repeat) adds nothing to the file. Confirm which debts qualify, who contacts the creditors, and how fees are calculated, because company descriptions of debt scope differ and program pages change. A settlement provider cannot compel acceptance merely by enrolling the account, so obtain a clear account of what happens if the creditor refuses.

Counsel will gather the records, test the assumptions, and draft a submission the decision maker can approve without asking for more. Counsel should ensure each obligor release is addressed in its own terms and ensure legal notices reach the right hands. Do not discuss the file with the collector, even briefly, without advice.

Resist the urge to answer a deficiency notice with a number and no papers. An offer without a ledger is a wish with a cover letter. Return to the signature before signing anything new; the file the owner builds now will be weighed against the owner if litigation follows.

The IRS guidance on canceled debt treats forgiven balances as taxable income subject to stated exclusions, so the after tax cost belongs in the proposal arithmetic. A first conversation with Delancey Street costs nothing and assumes nothing; it is the beginning of a diagnosis, with independent counsel handling the legal work. Nobody enjoys assembling proof of their own insolvency. The discomfort is ordinary, and the files that face it directly resolve first.