Jus to clarify one of the the other responses to your question...whether or not the loan is sold in th secondary market has nothing to do with how your file is handled.  That is all "behind the scenes" stuff.  Most of the big banks sell the guaranteed portions, but it has no bearing on how your loan is serviced. It's understandable that you have concern about losing your home.  If you are in default on your sba loan and your home is pledged, you probably don't have much to worry about right now if there is no equity.  With that said, if your business closes and you end up making a settlement offer that is accepted, the settlement should include the release of the lien on your home. If you end up filing for personal bankruptcy, unfortunately that will not release the lien.  You won't be personally liable, but the lien will sit there until the property is sold.  For that reason, it makes sense to try and get the lien release today while there is no equity in it.  Why? Because its likely that at some point, your home will have equity again as home prices rise or as you pay down your mortgage.  Imagine how dissappointing it would be to pay off your mortgage only to learn that there is an SBA lien for $200,000 on yout home!

The first step is to contact the lender/servicer and tell them about your situation. Is there any chance of turning the problem around with forbearance? SBA is encouraging lenders to forebear. If you can afford a lawyer, hire a local one that has a personal relationship with the district SBA legal department. It may be one that closes SBA loans. The next step depends upon whether or not the guaranteed portion has been sold. The extent to which the lender can perfect its request for SBA to purchase the guaranteed portion also plays a part. SBA has be looking for ways to repair or deny' its guarantee if they can find mistakes' made by the lender. You strategy all depends upon the lender's response after you ask for forbearance or tell them you're calling it quits. Let us know what they say. Jerry Chautin tenonline.org/sref/jc1bio.html ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

Phanio makes some good suggestions. Consider renegotiating terms with your lender. Changing the terms of payment e.g. paying less per installment but for a longer period of time Paying less over more time with a higher interest Asking your lender to forgive a portion of your late payment and agree to pay on time in the future You can also consider liquidating business assets or converting your assets into cash may temporarily help you pay off your loans until you can afford to pay your bills on time again. Read more about avoiding and managing loan defaults in our blog.

To be completely honest. Quit trying to find a way around the issue and start talking with your lender. Let them know what is going on and what your plan is to make sure it does not go into default. You never know, they may be able to work something out (like a refinacne) with you - don;t you never know until you ask. But always keep them in the loop - if you surprise them - they will get mad and take what they can.

They will not go after your home if there is no equity, but understand the lien will remain in place for ever so you will never have any equity. You can't refinance as well. And if you sell any profits, these will go to them...You must resolve this mater or the house is worthless to you. You need a sba loan workout with an offer in compromise to rid yourself of this major issue. If you need further help with this, send me a pm. ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.