Easily Request an SBA Lien Release
The Small Business Administration () has long provided loans to companies in order to help them thrive. SBA loans are partially guaranteed by the federal government and issued by participating lenders to provide needed funds for startups, expansions, the purchase of real estate associated with the business, and more. The need for these loans grew even greater recently due to the impact of the pandemic on businesses, and loan limits have increased.
Unfortunately, the pandemic's impacts have also affected the ability of many small businesses to maintain their SBA loans, which can result in a lien that can affect your ability to sell your home or even result in foreclosure. DoNotPay can help you release a lien and even negotiate better terms to help you become current on your loan. DoNotPay can also help you with other lien issues such as how to fill out a lien release form, how to remove a state lien from public record and learn about tax liens on credit reports.
What Is an SBA Lien?
Many small business owners use their homes as collateral for obtaining an loan, and if they fall behind on their payments, the lender can foreclose their property or place a lien on it. Even if the home was not used as collateral, defaulting on the loan can result in a judgment lien that gives the SBA the right to liquidate the property owner's funds to satisfy the debt, including placing a lien on the home. A lien attaches to the property and prevents you from selling or refinancing the property without becoming current on the loan.
The Problem With SBA Liens on Property
The problem with SBA liens on a property is that the lien attaches to the property itself, not the borrower. Because of this, if you are even able to sell your home, the purchaser then becomes responsible for paying the lien. This is understandably a turn-off to many potential buyers, and generally, the lien results in the property owner being unable to sell.
How to Get the SBA to Release a Lien on Your Own
The SBA will release liens for two reasons:
- You were able to get current on your payments and there is no longer a need for the lien.
- You were able to include the value of the lien in the price of the property and found a willing buyer in order to at least partially pay off the debt in order to allow the sale.
Either of these methods involves making a formal request to the SBA known as a "Release of Collateral" request. This request requires you to send a detailed letter to the SBA stating the reason you are requesting the , and (if applicable) the reason the SBA is not to be paid in full as a result of the transaction and an explanation as to how the business owner plans to become current on the loan and keep up with their monthly payments. Along with the letter, documentation must be included, such as:
- An official appraisal of the property that is less than six months old.
- A verified balance of all other liens that have been placed on the property and have priority to the SBA lien.
- Proof of insurance on the property, including flood and hazard insurance if applicable.
- A financial statement from the creditor.
- Copies of your federal tax return from the past two years.
- Copies of a fully executed purchase contract, if applicable, including all counter-offers and addendums.
- Permission for the SBA to discuss the lien with a third-party, such as an interested purchaser.
These letters can be sent by mail or electronically uploaded to the SBA's district offices in Birmingham, El Paso, or Santa Ana. You can contact SBA and request for lien removal here:
|SBA Release of Collateral||SBA Form|
|SBA ROL Requirements||VO3-04-14 Form|
|SBA Phone Number||800-827-5722|
|SBA Email||Send a message|
How DoNotPay Can Make the SBA Lien Release Process Easier for You
The process of obtaining an can be daunting. Luckily, DoNotPay's Remove a Lien product can help you amass the information needed to request a lien release and can even help you renegotiate the debt so you can become current.
Simply follow these three simple steps:
- Search for remove my lien on DoNotPay.
- Start our Remove My Lien product.
- Answer some questions about your specific lien and let us help you craft a letter to your creditor to resolve the issue.
DoNotPay will send the letter to your creditor, and you can expect to hear back from them directly on the matter within two weeks.
What Else Can DoNotPay Do?
Having liens removed from your property enables you to have the option to sell or refinance freely, and gives you the peace of mind of knowing your property is secure. This is just one of the many tasks DoNotPay can make easier and less time-consuming for you. Visit the pages below to learn about a few more tasks that we can help you with:
- Learn if there’s a lien in your house
- Learn what is a lien release on a car
- How to sell a car with a lien
DoNotPay can also help you with the following:
- Increase Your Credit Limit
- Release of Liability
- Reducing Property Taxes
- Cleaning Up Your Credit Report
- Managing Bills
- Filing a Claim in Small Claims Court
- Contacting Customer Service
- Closing Bank Accounts
Want to know even more ways that DoNotPay can help you with the many tasks that take time, effort, and ability away from the things you want to do? Sign in or sign up today.