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cfortunato
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Category: Bankruptcy Law
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Experience:  Bankruptcy professor.
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With an SBA express loan does the Government guarantee portion

Resolved Question:

With an SBA express loan does the Government guarantee portion stay attached to the borrower even through bankruptcy?
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 2 years ago.
Hi JACustomer,
1) Are you asking if the government remains liable for the loan if the recipient files a Bankruptcy?
If so, is this regarding a personal or a business Bankrutpcy?
2) Was the SBA loan personally guaranteed?
3) What form is the business (corporation, LLC, etc)?
Customer: replied 2 years ago.

I have a business and I am considering applying for an SBA Express loan to use as a Line of Credit for operating expenses. I have been told that if I were to default through bankruptcy that the amount owed on the SBA express if there was any would stay with me and I would still have to pay it back. Not unlike an IRS judgement on taxes.

Customer: replied 2 years ago.

I have a business and I am considering applying for an SBA Express loan to use as a Line of Credit for operating expenses. I have been told that if I were to default through bankruptcy that the amount owed on the SBA express if there was any would stay with me and I would still have to pay it back. Not unlike an IRS judgement on taxes.

 

The corporation is an S corp and it is personally guranteed with my signature and business assests.

Expert:  cfortunato replied 2 years ago.

Who told you an SBA loan is not dischargable in a Bankruptcy?

Customer: replied 2 years ago.
The Lender that is proposing the loan. The default would be a business default secured by inventory that in the event of default may or may not have value to it and guaranteed with my signature.
Expert:  cfortunato replied 2 years ago.

There are no exceptions to discharge for SBA loans, and SBA loans are not treated similarly to taxes.

This means that if you file a personal Bankrutpcy, your personal liability for the loan will be discharged, but your business liability for the loan will remain (unless you also file a business Bankruptcy).

 

I think this is what you wanted to know. If not, please let me know.

Thank you.

 

Customer: replied 2 years ago.

I was concerned about the business filing bankruptcy. So to clairify, if the business files bankruptcy then the loan will be discharged?

Expert:  cfortunato replied 2 years ago.

If the business files a Bankruptcy, the business will no longer be liable for the loan, but you will remain personally liable for the loan - even if the business files a Bankruptcy - unless you also file a personal Bankruptcy.

cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience: Bankruptcy professor.
cfortunato and 2 other Bankruptcy Law Specialists are ready to help you

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