SBA EIDL Loan Defaults and the Statute of Limitations 12-24-2023

Many clients have contacted us regarding defaulted SBA EIDL loans and the period of time in which the SBA or the Government may sue them to collect on the defaulted loan (the statute of limitations). The law and rules, as noted below are complex and vary based on the facts of the case.

1. The Federal Government has 6 years to commence a lawsuit (statute of limitations) against the entity or person that obtained the EIDL loan from the SBA and defaulted.
2. The Federal Government also has 6 years to sue the guarantor of a defaulted SBA EIDL loan.
3. The 6 years runs from the date the borrower defaulted on the debt or the last time the borrower made a payment or otherwise acknowledged the debt in writing.
4. However, the Federal Government also takes the position that the statute of limitations for fraud on an SBA EIDL loan is 10 years.
5. Tax Refund Offsets - The IRS generally has 10 years to collect outstanding taxes, penalties, and interest by offsetting tax refunds. This 10-years starts  from the date the tax return was filed or the date the tax was assessed.
6. Federal Payments Offset - Federal agencies generally have 10 years to refer eligible debts to the Treasury Offset Program for administrative offset of federal payments like Social Security retirement and disability benefits. 
7. Salary Offset - Salary offset refers to withholding money from a federal employee's disposable pay to collect a debt owed to the federal government. There is generally no statute of limitations on federal salary offsets.
8. Administrative Wage Garnishment - This is garnishment of pay as a means of collecting defaulted federal debt, even for a non-government employee. There is generally no statute of limitations as long as the underlying federal debt is still valid and legally enforceable.However, only 15% of a person’s pay may be offset thru wage garnishment. 
9. This post does not discuss the statute of limitations for criminal penalties or actions by the Federal Government, which is beyond the scope of this post. 

Individuals or businesses with questions about SBA EIDL loans should contact Jim Shenwick, Esq   [email protected]    917 363 3391Please click the link to schedule a telephone call with me.https://calendly.com/james-shenwick/15minWe held individuals & businesses with too much debt!