Offer in compromise

Definition

A settlement of an SBA deficiency for less than the full balance owed.

Why It Matters

It is the formal route out of a deficiency, and it turns on what the guarantor can actually pay rather than on what is owed: the agency weighs current income, assets and prospects against the cost of pursuing the debt. Refusing to engage does not make it quieter, since an unresolved federal debt can be referred to Treasury for collection and offset against tax refunds. Documented cooperation early is worth more here than any argument about the business.

In numbers: A guarantor with a $550,000 deficiency, no assets worth selling and modest income may settle for cents on the dollar, but the process runs on filed financial statements rather than on a phone call.