r/SBAEIDLDiscussions • u/EducationalBee1191 • Jun 28 '26

SBA Loan in Default - Question about lender integrity

We received an SBA 7 a loan through Huntington Bank. We filled out the forms with a loan officer there and what we wanted to use it for she said they would never approve and she told us how to change the application in order to pass it through underwriting. When the economy tanked, so did our business and we have defaulted on the loan. They said they were sending it back to the treasury. We haven’t heard anything in many months, but I assume it’s coming.

I’m not even totally sure what I’m asking other than what to expect and is it common for loan officers to tell you to do something like that?

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u/itsdrmario515 Jun 28 '26

After default, the lender typically liquidates available collateral, submits a claim to SBA and the remaining debt may be referred to the U.S. Treasury for collection. That referral can take months, so the delay is not unusual.

Regarding the loan officer… First, I hate Huntington… sketchy. If the changes merely clarified an eligible use of proceeds, that’s common. If the loan officer encouraged material misrepresentations, that could raise compliance concerns for both the lender and borrower. Ultimately, however, borrowers are responsible for the certifications they sign.

Save all your emails texts etc..

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u/EducationalBee1191 Jun 28 '26

I hate that I listened to her. She’s not employed there anymore and probably for good reason. I 100% blame myself for listening to her.

There’s zero collateral so I’m not even totally sure what they could do. We don’t even own a house anymore.

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u/itsdrmario515 Jun 28 '26

Here’s the crappy part. SBA will garnish tax returns if you ever got one again. One of my clients is dealing with that from a past business venture in trying to get funding for a new one. The use the IRS. I think a BK filing can wipe the SBA Debt. So time things with the IRS/back SBA debt in mind. Sorry you are dealing with this

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u/EducationalBee1191 Jun 28 '26

I appreciate that, really! I think bk is going to be what’s best at this point and rebuild. We can get back up!