What Is an SBA OIC
An SBA Offer in Compromise allows you to settle your EIDL loan for less than the full balance. The SBA will consider an OIC when it determines that the full amount is not collectible and the offer represents the maximum the borrower can reasonably pay. This is a legitimate federal program -- not a scam or a loophole.
Eligibility Requirements
To qualify, you must demonstrate financial hardship. The SBA evaluates: your current income and expenses, asset values (both business and personal if you signed a guarantee), future earning potential, and the cost to the SBA of continued collection efforts. The SBA generally wants to see that the OIC amount exceeds what they would recover through normal collection.
How to Submit
Contact the SBA's Office of Capital Access or your loan servicer to request an OIC package. You will need to provide: a completed SBA Form 1150 (or equivalent), personal financial statements, business financial statements, tax returns for 2-3 years, documentation of hardship, and your proposed settlement amount. The process typically takes 3-6 months.
Tips for a Successful OIC
Be thorough and honest in your financial disclosure -- the SBA will verify. Propose a realistic amount based on your actual ability to pay. Include a lump sum if possible (the SBA prefers immediate payment). Explain the hardship clearly and document it. If your first offer is rejected, you can negotiate or resubmit with additional documentation.
Frequently Asked Questions
What percentage do most OICs settle for?
Settlement percentages vary widely based on individual circumstances. Some settle for 10-20% of the balance; others for 50-70%. The SBA evaluates each case individually based on collectibility.
Can I make payments on an OIC instead of a lump sum?
The SBA may accept a short-term payment plan (typically 12-24 months) instead of a lump sum, but lump sum offers are generally preferred and more likely to be accepted.
Will an OIC affect my credit?
The SBA reports to credit bureaus. A settled OIC will show the account as 'settled for less than full balance,' which is better than a default or charge-off but not as good as paid in full.
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