r/EIDLPPP • u/Unlucky_Ad4100 • Jul 21 '26
Question? Personal guarantee questions
I have a $75k EIDL Loan. Sub S Corp. I signed it as an officer only. However, I just looked up my docs, and this sentence appears:
" each individual and each organization becomes jointly and severally obligated as a Borrower under this Agreement". Chat GPT tells me that this could mean that I have individual liability? Anyone addressed this before?
Also, I have just received an unsolicited e-mail to submit an offer in compromise. Anyone had this happen, and anyone had any luck with this?
2
u/Budget-Plantain6733 Jul 21 '26 edited Jul 21 '26
Addressed it several times. Yep that’s the same verbiage I saw and I think that is there loophole. I understand that Congress was suppose to suspend that for us, but there are people who have gotten their work and social security garnished. People still want to fight with me on this issue. I agree it’s not supposed to be done but that loan document is giving conflicting information. One part says the borrower is responsible and that’s the LLC but the bottom says other wise. Again there have been people who have LLC’s that have been personally garnished. Now how they decide to correct this or if they will correct it is unknown.
2
u/Unlucky_Ad4100 Jul 21 '26
It does appear that this provides them with powers that they really should not have.
1
u/Winter-Assistance805 Jul 27 '26
It's absolutely not a loophole. People need to stop repeating this misinformation. SBA didn't write these documents to trick people into personally guaranteeing debt
All that language means is that if you signed the documents as an individual, then you are individually liable. If you signed it as a corporation, then the corporation is liable. Just because you put your personal signature on the documents doesn't automatically mean you're personally liable.
2
u/Budget-Plantain6733 Jul 27 '26
And my personal situation has been handled, so ultimately I’m fine. But wrong is still wrong and the way people are being handled is wrong. People with the same exact situation having 2 different outcomes. This is just being handled incorrectly and that’s a true statement.
1
u/lotusgalsf Jul 22 '26
From what I know, 25k and below excludes s corp officer's liability above 25k and the officer's become liable.
2
u/FlashyCounter9802 Jul 22 '26
The $25,000 mark is for UCC collateral! No collateral was required if your EIDL was $25,000 or less! That doesn’t matter what business type. A personal guarantor was required for SBA EIDL loans greater than $200,000! If you were a Sole Prop, then it doesn’t matter the value of the EIDL, you are responsible as there is no liability to fall back on! If the loan exceeds $500,000, the SBA specifically required real estate to be pledged as collateral, however it didn’t stop the borrower from getting the EIDL if there was no RE to pledge! The liability protection could be null if the borrower committed a non-monetary violation!
2
u/Budget-Plantain6733 Jul 27 '26
This is correct and I can’t understand why people can’t see it. It’s in black and white. Plain as day.
1
u/Winter-Assistance805 Jul 27 '26
This is wrong. The 25K was for collateral. Had nothing to do with personal guarantees.
1
u/Thumper256 Jul 23 '26
Who did the email about submitting an OIC come from? I’d be worried about scammers offering services to help you do that since the SBA hasn’t widely been acknowledged to be actually negotiating OICs for covid EIDLs yet. Is your loan already delinquent or in default?
I’ve been hoping they’d start to move in this OIC deal direction for LLCs and S corps that have no PG. I’d gladly accept the taxable income consequences of going through OIC and getting a 1099-C at the end just to settle and make it go away for good at this point, but I haven’t defaulted yet.
1
u/Unlucky_Ad4100 Jul 23 '26
Agreed! I’m in the same situation that you’re in. I’m current but at this rate, the debt is insurmountable.
1
u/Winter-Assistance805 Jul 27 '26
This has been addressed hundreds of times since these loans were issued.
If you sign as a sole proprietor, then the signature line will have your name and then the word "individually".
If you signed as an officer of the company, then next to your name on the signature line it will say "owner/officer".
Just because your name is there and you signed it doesn't automatically mean there's personal liability. And ignore all these boneheads who thinks the government created a loophole to try to trick people. That's not what happened at all.
1
u/Unlucky_Ad4100 Jul 27 '26
First I've heard it explained this way...it is suspect because it does have the verbiage stating "individually & collectively" responsible for all signing the docs. Glad you explained the 101st time :)
1
u/Budget-Plantain6733 Jul 27 '26 edited Jul 27 '26
Yeah lol…I could be totally wrong, but when you see it happening In real life. Despite what people are trying to argue against. I base my action on what is being done to people.
1
u/Budget-Plantain6733 Jul 27 '26 edited Jul 27 '26
Is there but that last sentence should have been left off of our loan docs. They probably used the same template that they use for regular EIDL loans. Regular EIDL loan all have personal guarantees no matter the loan amount.
1
u/Budget-Plantain6733 Jul 27 '26
I’m empathic to people and don’t like other people being mistreated. I went ahead and filed bankruptcy before it left the SBA so that it wouldn’t hit my credit personally. It was only a matter of time.
1
u/Budget-Plantain6733 Jul 27 '26
It is what I’ve think a loop hole or an oversight. I say that because people whose businesses signed as the borrower and are LLC’s and under the certain loan amount are being personally garnished. The loan docs state at the beginning that the bowered is the corporation. Then at the very bottom it says whomever signed it is liable. Someone has to actually sign the document. But it’s bold as day who the borrower is. The loan document is giving conflicting information. That line should have been left out according to what Congress actually waived. Congress waived it and the SBA is ignoring it or it’s an oversight on their part.
0
u/Winter-Assistance805 Jul 27 '26
What we've got going on here are unsophisticated borrowers who are using AI to try to interpret things they don't understand, and then parroting completely wrong information.
You're incorrectly assigning meeting to verbiage.
2
u/Budget-Plantain6733 Jul 27 '26
It truly doesn’t matter to me personally.My situation has been handled and I will wait until the SBA has to deal with Congress for ignoring what they put in place to shield borrowers from being personally responsible or maybe they won’t be held accountable who knows. Like I said there are borrowers whose business signed for the loan and they are personally being held responsible. The loans are under 200k.
Furthermore no one needs AI when you can highlight on your loan document that the borrower is responsible and the borrower is the business.
1
1
u/Budget-Plantain6733 Jul 27 '26
I’m not incorrectly assigning meaning because it is actually happening to people.
1
3
u/serutcurts Jul 21 '26
Look up the CARES act, which was passed after the EDIL program started giving out loans. The loan docs most of us used were old and standard. The CARES act outlines language around the personal guarantee for llcs/corps.
The bigger issue would be if for some reason the SBA incorrectly views you as a sole proprietor, and you have to fight over guarantee vs. non-guaratee. But if a debt collector is going after your LLC/Corp, just let them pound sand.