17 Q&As from Our YouTube Channel

From the very beginning of the pandemic, Linda Rey and I set out to provide thoughtful, truthful, and accurate information to struggling Small Business Owners.  Literally, on March 18, 2020, we discussed how scammers, sharks, bad bloggers, and click-baiters, would emerge from the slimy depths of the internet to give bad information, poor advice, and misleading directions.

We’ve been answering questions ever since. During the pandemic, while we processed hundreds of EIDL applications for a total of $70M in approved funding, we answered questions on free phone calls, email inquiries, and our live YouTube broadcasts.

We’re passionate about Small Business and we want to do our small part to demonstrate our commitment to their success. Here’s a sampling of recent comments and questions we’ve received in response to a variety of our YouTube videos.

Q: The only choice, it seems, is to bk the loan if you truly can’t pay. I’d say ignoring sounds like a bad idea. Many of these youtubers have people thinking forgiveness is coming. One was cheering because he heard people saying loans were being charged off. He has no idea that’s not a good thing, yet he pumped that nonsense.

Our Response:

The Federal government has a long memory.” That’s why ignoring your COVID-19 EIDL is a BAD idea!

Even if you’re making your payments, you might be inadvertently ignoring simple basics to comply with the terms of the Loan Agreement you signed. Things like submitting annual financial statements or notifying SBA of changes to your business. Failing to comply is literally considered a DEFAULT by SBA in the Loan Agreement!!!!

Our Post-Closing EIDL Blueprint has all the info you need to remain compliant and NOT IGNORE the COVID-19 EIDL!

As for filing bankruptcy: this is another one of those topics tossed around carelessly by the pseudo-experts. While filing bankruptcy could potentially discharge the debt, that means you may have to ALSO file a personal bankruptcy. AND THAT MEANS starting all over with your credit. Or, even worse, having to include your other personal assets and liabilities in your personal BK just because you listened to some fool pretending to give expert advice!

There are other ways to manage a challenge with payments. Our Post-Closing EIDL Blueprint discusses remediation in depth.

Q: I’m closing my small business down due to health reasons. There’s no personal guarantee. Am I personally affected?

Our Response:

Trevor and I are truly sorry to hear about your having to close your business! We have seen so many small business owners suffering during these uncertain economic times.
You should be aware that, even absent a personal guarantee, according to the SBA’s Loan Authorization and Agreement (LAA), you may still have a personal liability for a defaulted loan. Meaning, SBA could potentially come after you for repayment of the debt. This is one of those murky areas where SBA’s poor communications fails to provide clarity.

If a business has a COVID-19 EIDL and is closing down, you must contact SBA, whether or not there’s a personal guarantee. SBA has a process for every situation and challenge, and closing a business is no different.

Q: You need to go back and research personal property. It clear states that you guaranteed the loan . With your personal assets. So that’s what my attorney’s said and my CPA if the loan is over 200 thousand

Our Response: 

1. We created our Post-Closing Blueprint to delve deeper into complicated concepts like this.  If you purchase the guide today, you will receive free updates through December 2024. We’re updating the guide occasionally due to the changing landscape of the COVID-19 EIDL requirements.  In our recent experience, SBA is literally changing the rules on the LAA, and, we know that internally they are still working out procedures for the new challenges facing the COVID-19 EIDL Borrowers, including defaulting loans, hardship accommodations, and the concepts of personal guarantee and personal liability.

2. SBA’s communications for this complicated topic are terrible. As with so much about the SBA program, it is nearly impossible to get clear guidance on a challenge or an answer to a question.  Your Attorney and your CPA are reading this one way, and I’m reading it in a different way because of my background as a Loan Officer.

The other element to your comments is that it is difficult to properly explain these complicated concepts in our videos. We do our best, but our Post-Closing Blueprint provides a more comprehensive discussion on these topics.

Our intention with our guide is to provide background to help the Small Business Owner come to an understanding of complicated SBA concepts instead of solely relying on a “pat” answer to a complicated question posed to an attorney or CPA, which is, IMHO, what happened in this case.

Our guide gives you all the information and tools you need to manage your COVID-19 EIDL. We made our best effort to untangle the complications of SBA’s confusing communications.

Q: ⁠what if you have less than 20% ownership but also have a personal guarantee w loan over 200,000?

Our Response: 

We define and explain the personal guarantee in great depth in our expert guidebook “Post-Closing Blueprint” but a short answer is this: personal guarantee means the guarantor(s) (business owner(s) with 20% or greater ownership interest) will take over the responsibility to repay the loan in the event the business entity cannot make payments.  The assets of the business owners are not considered collateral for the purpose of the EIDL, but those personal assets can be seized in legal proceedings that result in a judgment.

Click to Watch Video Where we Answer This Question
Click to Watch Video Where we Answer This Question

Q: Thank you for your response. However, I do know of a loan over $200,000 with (4) personal guarantees. None of the members personally own more than 20% but collectively own over 51% of the company. Each name is and was included in the loan and it was approved. Was this a mistake to have the loan issued in the first place? Are the members liable as a collection even though they don’t personally own more than 20%. Thanks Again guys love your videos.

Our Response: 

I often saw where an SBA Loan Officer would request a “list” of all owners with less than 20% ownership and require that all ownership percentages total out to 100%.  But the “list” did not require SSNs or similar personal information, only a full name and percentage of ownership.  The fact that a person with <20% has their name on a “list” with an EIDL application does not mean they are on the loan.

If they were required to sign the EIDL LAA, that’s a whole other story, and likely the application was prepared incorrectly.  If so, SBA probably didn’t question it as so many of those early applications went through an automated process.

Q: Would the same apply to a sole prop business?

Our Response:

It’s not unusual for Small Business Owners with COVID-19 EIDLs to express confusion and concern about various requirements and restrictions imposed by this SBA program.

That’s why we created our comprehensive expert guidebook “Post-Closing Blueprint” as your single source “go-to” reference guide before you interact with the SBA.  We urge Small Business Owners to purchase the guide now because the EIDL is a 30-year loan and many questions and issues will come up.

If a Sole Proprietor has the equipment they use for the business enterprise, then the equipment can be considered collateral.

Click to Watch Video Where we Answer This Question

Other “intangible” assets such as Accounts Receivables, payments due on contracts, etc., are considered collateral. Our guidebook delves into the definition of collateral and business assets in detail.

Click to Watch Video Where we Answer This Question

Q: Any chance they may extend the 10% hardship payment longer than 1 year?

Our Response:

The SBA’s hardship accommodation is actually six months, not one year.  And, as per the SBA’s comments on their website, at their discretion, SBA may extend a hardship accommodation an additional six months.

In fact, the EIDL program generally allows for SBA to provide multiple hardship accommodations throughout the life of the 30-year loan!

As you may know from watching our YouTube videos, we only focus on facts, and we tend to demur from pure speculation. We don’t want to disappoint, that’s why we don’t speculate and why we prefer to focus on facts.

That’s why we stridently urge Small Business Owners to aggressively communicate with their U.S. Senators and Congresspeople to implore the federal government to both reauthorize the SBA and to enhance remediation for Small Business Owners with the COVID-19 EIDLs.

Congress controls the process!  Let them know how you feel and about the help you need to continue your recovery from the pandemic!

Q: The issue…for me at least…the economy is still crap. And my business has not recovered 100% so my income has declined and cost of living has increased. I really fear I will have to BK at some point.

Our Response:

We’re always disappointed to hear how Small Business Owners continue to struggle in this post-pandemic era.

We believe the U.S. Congress can certainly do more to relieve the suffering by providing some guidance to SBA to either increase deferments for the COVID-19 EIDLs, or to lower the interest rate, or, heavens-to-Betsy, offer FORGIVENESS!!!!

In the meantime, with our experience over decades in business ourselves, through all kinds of economic “storms” including recessions and the global mortgage meltdown, maybe we can offer you some kind and positive advice?

First, Trevor, a retired Loan Officer and “student of economic history” believes the economy is doing much better than most folks believe!  Yes, he knows that’s an unusual take, but it’s based on actual economic metrics, and ignores all those confusing media messages (you know, “There’s a recession coming!” “No recession!” “Is it recession yet?” and blah-blah-blah).

Second, from our own experiences, we believe that, when the going gets tough, the tough get going by focusing on ONE THING: Marketing!  We have so often seen how small businesses suffer at the hands of their own failures to increase marketing efforts.  In our opinion, the best way to overcome most business challenges is to get out there and try to find more customers.  The only way to do that is to invest 85% of your time and effort (and money) on MARKETING.

We can personally attest to how our increased marketing efforts have helped us to build our new business initiative after the SBA’s COVID-19 program ended, effectively “putting us out of business” in May 2022.

Marketing works! We truly hope you’ll find a way to overcome the business challenges facing your small business and that filing for bankruptcy will only be a distant and unrealized concept!

Q: I feel its vital folks out there get a sense for what is really happened to small businesses and what heartache and hardship we were put through. I mean the sba can cancel the interest and allow businesses to pay back the loan at hardship accommodation mode for 5 years. This is going to take a long time for mom and pop places to recover from. And county level officials need to be proactive and hold urgency when small businesses get their licenses taken away. We cant wait for legislation for next year for this to help. We need help at real time! Both parties need to mature up.

Our Response:

SBA cannot cancel interest and is not currently allowing hardship accommodations for 5 years.

We discuss SBA’s hardship accommodation and other loan remediation policies, including providing strategies for Small Business Owners to negotiate and communicate with SBA in our comprehensive Post-Closing Blueprint guidebook.

We stridently urge businesses with the COVID-19 EIDL to purchase our guide as their “GO-TO” reference before interacting with the SBA.

Q: Does the SBA automatically put a lien on you assets if the loan amount is 50k ? If I am current would their be a lien on my property?

Our Response:

We answer this question in detail in our Post-Closing Blueprint.  We encourage business owners with a COVID-19 EIDL to purchase our guide as the “GO-TO” reference before interacting with SBA for any questions or concerns about the EIDL.

The short answer: SBA put a UCC lien against the business assets for a COVID-19 EIDL if the loan amount was greater than $25,000.00.

There is no lien against your personal assets.

The lien is there from the beginning of getting the loan; they don’t put additional liens later on.

Q: They accused me of fraud six ways from Sunday, they denied my loan by accusing me of fraud, isn’t that negligence and character defamation? They did the same to hundreds of legitimate SBOs, so I’m wondering why we’re not banding together and filing a class action…I was shocked at how focused they were on fraud, against all logic and common sense, and they refused to hear me out or entertain the idea that they were wrong. Maybe the reason they’re making such a big deal about the alleged d fraud is because they finally realized they were actually negligent AND defamed innocent people’s characters, but don’t want to get sued…?

Our Response:

Call SBA Disaster Customer Service at 1-833-853-5638. Explain briefly the history of your application, focusing on these four key elements:

ONE: You Signed the Loan Agreement for a COVID-19 EIDL (You should have this in front of you on the call with the SBA Disaster Loan number located in the upper left hand corner of the agreement)

TWO: You never received the funds
THREE: You were told your file was flagged for “fraudulent activity”
FOUR: You want to confirm that you do NOT have a COVID-19 EIDL loan with SBA that needs to be repaid.

The SBA representative will transfer to the servicing center if a loan was funded. You will need to repeat your story again, but your goal is to ensure you have NO DEBT for the COVID-19 EIDL program.

Please note that we offer a one-hour phone consultation where Trevor will call SBA with you on the line if you prefer to have our expert professional assistance. You can schedule the paid consultation call here.

Q: ….so I get it…that’s why I continue to make monthly payments. Yet I wonder if defaults reach a serious level what in your opinion will Congress or the SBA attempt to do to prevent their defaults from snow balling well beyond any foreseeable limits? Obviously the US government isn’t benevolent unless you are a too big to jail bank but are the bureaucrats that heartless?

Our Response:

We literally have no idea how SBA and/or Congress will react to a high number of COVID-19 EIDL defaults. There’s no true precedent, except for maybe Hurricane Katrina where a portion of the SBA disaster loans were ultimately forgiven thanks to a strenuous campaign by political representatives from Louisiana.

Currently, the mood in the Senate, at least, led by Senator Joni Ernst, seems to be to demand that SBA aggressively enforce collections on ALL COVID-19 EIDLs.  There does not seem to be a mood to accommodate and support Small Business Owners, the so-called “backbone of the American economy.”

The best course of action we can recommend is this:
1: Begin a constant communications campaign with your United States Senators and your local Congressional representative.

2: Demand that Congress create a response to these defaulted loans and future defaulting loans to help business owners emerge as undamaged as possible, including forgiveness, loan remediation to include longer hardship accommodation periods (currently six months), and potentially reducing the interest rate on the COVID-19 EIDLs.

3: Demand that Congress reauthorize the SBA and EXPAND the SBA with funding and expanded Congressional guidance.

Q: I have an eidl loan that was $50,000. I am a sole prop, i do not have or own any business assets, did not put up any collaterall , i rent an apt, finance my car and basically have a dead seasonal service based self employment type ” business”. I cannot pay this loan back – what will happen?

Our Response:

We’re so very sorry to hear about your situation!  So many small businesses continue to suffer due to the economic ravages of the pandemic.

We know that SBA is wrangling internally with issues about defaulting COVID-19 EIDL loans. Their procedures are evolving frequently.

When all is said and done, even without collateral and without a personal guarantee, a defaulted federal debt is a serious problem. We address this issue in our comprehensive expert guide, the Post-Closing Blueprint.

We’re hoping you and other folks in your situation will rely on our guide as the primary reference source BEFORE you interact with the SBA to try to resolve the defaulted loan situation.

One word of caution: a lot of the “urban mythology” out there would have folks believing “the SBA is never coming after me and my little business” leading them to simply ignore the debt obligation.   We believe this is a tragically horrible strategy.  The federal government has a long memory and you don’t want to be on the receiving end of their collection efforts, ever.

Especially as several US Senators are urgently pressing the SBA to aggressively enforce collection on these debts, even those loans for less than $100,000!

Don’t ignore the debt; contact the SBA to work out a resolution. Use our guidebook to prepare you before you contact the SBA. We wish you all the very best in this terrible situation!

Q: a general question about ERC and worry about being scammed

Our Response:

In our experience, the IRS sends the refundable tax credit to THE BUSINESS, not to the ERC consultant. Hopefully, you did not give the consultant access to your bank account.  

The ERC consultant on our Referral Partners team gets paid by the Client AFTER the Client receives the IRS refund and the consultant has to trust the Client to pay the consultant fee.  

The IRS scam warning focuses on consultants who take fees upfront and/or who improperly process ERC requests, including with incorrect documentation or for ineligible businesses. Get our FREE ERC Guide.

We created a FREE ERC guide. Click on image to download.

Q: So what are my options if I’m not able to pay back my loan? I’m sure there are thousands of people out there that cannot pay these loans back

Our Response:

We’re sorry you’re experiencing difficulties with repayment of the COVID-19 EIDL.  So many Small Businesses suffered through the pandemic and subsequent economic difficulties.

We’re not sure what “…not able to pay back my loan” means, whether your business failed, or you’re still in business and cannot afford to make any payments at all, or if you need temporary assistance with a reduced payment until revenue improves.

We tried to anticipate all three of these situations and more in our Post-Closing Blueprint where we provide detailed guidance to answer questions like yours.  

We assembled our expert comprehensive guidebook based on our experience with SBA processing, our experience as financial services professionals, and over the past 9 months, speaking with Small Business Owners and the SBA to get the right answers to questions like these.

Our guidebook gives you strategic solutions including WHO and HOW to call at SBA, SBA forms you might need, TEMPLATES for submitting requests to SBA, and Step-By-Step instructions to help you resolve challenges with the SBA loan program.

Keep in mind that, while a business may be unable to pay these COVID-19 EIDLs, these are legal debts and SBA will require repayment in one way or another, either now or in the future through debt collection practices.  In other words, these loans are not simply a matter of “walking away.” Hope that helps!

Q: I am in the trucking business and with everything and the stimulus that I borrowed, it is going badly for me and I cannot pay the full monthly payment, if this economy does not improve, then they can do what they want with me and what I have been able to achieve so far

Our Response:

We are sorry to hear your business is still struggling.  The harsh realities of the pandemic combined with the following economic issues such as supply chain and inflation is certainly impacting millions of Small Business Owners.

SBA will allow you to pay a reduced payment of as little as 10% of the monthly payment (must be a minimum of $25.00) for a six-month period.  You can request this hardship accommodation on your MySBA portal.

If the issues are more urgent, then we recommend using our Post-Closing Blueprint to guide you on how to call the SBA, who to speak to, and the SBA’s forms and process.

5 FAQs about the SBA EIDL Loan

square thumbnail to promote a live youtube show. Linda Rey and trevor are leaning on each other and the caption reads: EIDL UPDATE: COMMON SENSE or Chaos.

Click to download this free guide.
Click to download this free guide.

There are five sections in this post that address various issues people inquire about with us on an almost daily basis.

  1. Our Post-Closing EIDL Blueprint
  2. COVID-19 EIDLs are not Forgivable
  3. Fake Forgiveness Freaks
  4. IRS Form 982
  5. Our consulting services to assist COVID-19 EIDL Borrowers 

Our Post-Closing EIDL Blueprint is our comprehensive, expert guide that outlines all SBA EIDL obligations, restrictions and questions that may come up with the COVID-19 EIDL.

One of the FAQs we get on an almost daily basis is when a Borrower is having difficulties making payments. We address this in our Blueprint.

All the topics covered, in our Blueprint, can be found in the table of contents including “Make A Payment Toward Your EIDL.” You can then click through to “Hardship Accommodation.”

The navigation link takes you directly to the section on how to request lower payments.

COVID-19 EIDLs are not Forgivable

If you call SBA’s customer service number, as Trevor did this morning, the initial menu prompt states the loans are NOT Forgivable.

You can request a reduced payment by as much as 90% (see the section in our guide about “Hardship Accommodation”) for six months. It may be possible to request additional extensions (subject to SBA approval.)

A business owner cannot pause payments.





SBA’s position on difficulties repaying the COVID-19 EIDLs is this: They expect Borrowers to pay, no matter the circumstances. This includes the ever-so-drastic event of a business partner embezzling the disbursed funds, which happened to one of our clients.

You can learn more here about how we found out that our client’s “partner” was indicted today.

Fake Forgiveness Freaks

We know there is lots and lots of chatter on the internet and elsewhere about these loans being Forgivable, and apparently all kinds of misinformation from alleged “experts” on how to manipulate the SBA system to make the loan Forgivable.

These “fake experts” have folks chasing fantasies to get their loans Forgiven, including a new class of scammers offering to negotiate an “Offer In Compromise” with SBA–for a FEE of course.

SBA’s internal procedures are still evolving. That’s why we provide FREE UPDATES to our Post-Closing Blueprint through December 2024 so you have the latest and most accurate information about the program.

IRS Form 982

This form does not pertain to Forgiveness of an SBA COVID-19 EIDL. This form is used to reduce the tax liability when a person or business receives a “discharge” of indebtedness (such as settling a collection account for less than the full balance because the amount of settled reduction is considered taxable income disclosed on IRS Form 1099-C).

From the IRS website: “Form 982 is used to determine, under certain circumstances described in section 108, the amount of discharged indebtedness that can be excluded from gross income.

Our latest information, directly from reputable sources at SBA, is this: If a COVID-19 EIDL defaults, SBA will attempt to recover the debt, but they will ultimately transfer the defaulted debt to the IRS for collection. IRS then can collect through liens, wage and benefits garnishments, and tax refund seizures.

Our Consulting Services

We offer consulting services to assist businesses in navigating a variety of questions and challenges with their COVID-19 EIDLs. We have been assisting with these services since September of last year.

If a U.S.-based business is in need of our services to assist with their COVID-19 EIDL, we will prepare and send a consulting proposal that outlines the objectives, scope of work, estimated time to complete, and cost.  


NOTE: We also offer consulting services for Natural Disaster loans and general business activities. Click HERE for natural disaster consulting. 


Aside from our specific expertise with the program and familiarity with required procedures and forms, we’ve come to learn that many CPAs and attorneys are providing incorrect information to their clients about this program. They may mean well, but their ignorance of actual SBA protocols can be very harmful, in our opinion, to the business due to the misinformation they provide.

A CPA or an attorney may have general knowledge of the COVID-19 EIDL program. With good intentions to help their clients, we’ve seen how their answers are attempting to be helpful, but often miss the mark with specifics about some of the complicated challenges and SBA communications of this program.

Pretend you inherited your Great Uncle’s 1963 Jaguar E-Type.
Trevor at Lime Rock Park, CT where Paul Newman Used to Race
It needs maintenance, or maybe a repair. You take it to your local mechanic, the one who has changed the oil and rotated the tires on your 2001 Honda for the past 22 years.
With good intentions, your mechanic may attempt to help you with maintenance or repairs on the classic Jaguar.  
But a mechanic who specializes in Jaguars–especially old ones–is probably a better choice, don’t you think?
Does that help you better understand the difference between your CPA/Attorney and Aurora Consulting?
We processed hundreds of EIDL files during the pandemic to obtain $70M in approved funding. We gave away free advice about the program to thousands of Small Business Owners. We spoke to hundreds of SBA Agents.
Since September 2022, we’ve assisted dozens of Clients and others with questions and problems with their COVID-19 EIDLs.
  • How many COVID-19 EIDLs did your CPA/Attorney process?
  • How many SBA Agents have they spoken to?
  • Did they read the SBA’s EIDL SOP (all versions)?
Where are you going to take that Jaguar now?

Terms of Use in the Fine Print

  • Are you the kind of person who reads those long legal “Terms of Use” statements on websites?
  • When you get a new credit card, do you read the Terms of Service statements and APR disclosures?

I am that kind of person.  I like to read. I know you’re thinking, “He’s well and truly insane because reading TOS disclosures is not what people call ‘reading!’” 

This affection for reading complicated disclosures and the like is one of the qualities that made me successful as a Mortgage Banker for 30 years. 

I cannot tell you how many times I won an argument with a loan underwriter or processor or colleague because I’d read the actual guidelines. While I didn’t always quote chapter and verse, and often didn’t need to, the fact that I had read the guidelines informed my ability to win the argument.

Sometimes, knowing the guidelines helped me to say to an underwriter, “Show me where in the guidebook it says that, and I’ll happily comply and get the document you requested from the loan applicant.”


That’s some poker-level “call your bluff” Yoda-level-Jedi-mindtrickityness, right there.

My reading of the underwriting guidelines also helped me to call “B.S.” on people in the business who tried to take shortcuts…sometimes illegal shortcuts.

Consider the argument I was having with a loan processor one day about an appraiser’s failure to include the market value of a rental apartment in a multi-family house on the appraisal report (a “Standard Operating Procedure” of appraisals, BTW, FYI, and WTF).

While we’re having this polite and only slightly animated discussion—I was always a respectful professional—the Vice President of the mortgage company emerged from his office and shouted across the room at me, “Trevor, just go to Staples, buy a blank lease and type one up with the rental amount on it!

Yes, this really happened; I remember the loan applicant’s name, FYI, and this happened way back in 2001!

And, no, I did not buy a lease. Instead, I called the appraiser myself and requested the appropriate amendment to the report. This wasn’t crossing any legal lines because I was requesting something that was considered “common and customary.” 

And, no, I did not continue working at that company very much longer for obvious reasons.

I remember another reason for my affinity for reading disclosures. From the early days of my mortgage career, when presenting an application disclosure to a loan applicant, I wanted to explain to them what they were signing. I know that many of my colleagues, then and probably now, took the shortcut and simply asked people, “Sign here.” 

I refused to disrespect the loan applicants that way. I showed them due respect by first reading and learning the disclosure forms, then explaining to them before they signed, in the simplest language possible, what the heck they were signing. I refused to take the shortcut.

This shortcut mentality isn’t limited to people committing fraudulent illegal activities in the mortgage business. We see Small Business Owners taking shortcuts all the time, and we also see how shortcuts can get people in all kinds of trouble for their businesses. Not the illegal kind of trouble necessarily. More often than not, shortcut thinking leads to trouble with basic business operations, and, too often, profitability.

Let’s get to the meat of why we wrote this blog. We experienced something this week that is a good example of the “shortcut mentality” and directly ties into the opening premise: I like to read Terms of Use disclosures.

Our services include general business consulting. A small business client recently engaged our services.  Priority one is to improve bottom-line cash flow. Secondarily, it frees up time for our client to better run her business. 

This secondary activity involves mostly organizing basic business operations systems and procedures.  This is a business that has experienced rapid growth in the past three years, far faster than the owner could keep up with the increase in business to find the time to get the fundamentals in place.

She presented us with an important objective: she wanted to offer her employees health insurance and a pension plan. She loves her team and she wants to reward their hard work and loyalty with these benefits.

Fortunately, the State of Connecticut recently passed legislation requiring all small businesses in the state with 5 or more employees to register with a new state-managed pension plan.  The employer doesn’t need to contribute, simply register with the state for the plan. Employees can then decide if they wish to contribute to the plan, overseen by the state Comptroller’s office. 

We thought this was an excellent opportunity for our client to at least begin to offer a pension plan to her employees, with a longer-term goal of offering a better plan in the future, which the employer contributes.  Registering with the state plan would also keep the business in compliance with state regulations, another fundamental business organization principle we’re helping our clients to implement. 

In our first meeting with our client, we discovered her accountant had not filed the required annual reports with the Secretary of State’s office for three years, thus putting the business entity in jeopardy of imminent dissolution. We immediately filed all the reports.

The deadline for registering for the state-mandated pension plan was August 31st. On August 30th, I jumped on the state website to register our client.  The state is using an outside vendor as the administrator of the plan.  The state website redirects a registrant to the third party’s website.

I began the process of registration, entering the business EIN and special access code provided by the state. I created a username and secure password (a good topic for a future blog, BTW, especially for folks with the “shortcut” mentality).

I was then directed to the vendor’s “Terms of Use” disclosure page on the website. I scrolled through in my attempt to read the disclosures. Navigation was difficult due to the graphics configuration of the information box, but I found my way through most of the disclosures.  Having read lots and lots and lots of Terms of Use disclosures over the years, I can skim quickly because many of the terms are standardized.

But then I arrived at paragraphs 24-26 and my fast-scanning eyes had to hesitate and back up because what I was seeing was, at first glance, outrageous.  “This can’t be,” I said to myself as I scrolled back to slow down and read these three paragraphs more carefully.

Essentially these three paragraphs remove some of the registering business’ autonomy in its decision-making and essentially makes the pension plan administrating vendor a business partner of sorts! I couldn’t believe my eyes.

Humor me, and read the paragraphs for yourself and tell me if you agree these terms are absolutely outrageous, or not.


24. Use of Your Trademarks and Logo

By accepting the terms of this Agreement, you give xxxxx a limited, non-exclusive, royalty-free license to use your logo and/or trademark for the purposes of performing the services to support Plans using the xxxx Platform, xxxxxx business development purposes, or for any joint marketing activities or creating marketing collateral. xxxxxx will use your logos or trademarks in the form provided to us.

25. Non-Solicitation, Non-Compete

Unless we have agreed otherwise in writing, you and your firm agree not to solicit to employ any employee of xxxxxx or xxxxxx client or prospective client that you come to know solely by way of this Agreement. General advertisements and other similar broad forms of solicitation shall not constitute solicitation for purposes of this Agreement. Other than as expressly permitted by this Agreement or otherwise agreed upon in writing by xxxxxx, you also agree not to provide, directly or indirectly, or assist others in providing services that compete with xxxxxx services to any xxxxx client or end user of the xxxxx Platform.

26. Marketing and Business Development

You and your firm will devote sufficient time and resources to cooperate in good faith with xxxxx and/or create appropriate public and promotional announcements relating to the relationship set forth in this Agreement. This potentially includes conspicuously highlighting xxxxx on your website, inviting xxxxx as a speaker at in-person or virtual events, introducing xxxxx to Qualified Leads[2], and otherwise engaging in joint business development activities and regular meetings designed to promote and expand the Parties’ relationship and evaluate opportunities to expand the use of the xxxxxx Platform for clients and potential clients.

Now, I’m no pension plan expert, I don’t pretend to be, at all. So, I called an expert, someone with 30 years in the pension planning profession.  I read the three paragraphs to him and he was as astounded and outraged as I was. I then ran it by my partner, Linda Rey, and I called another expert with a payroll services company that also provides pensions as part of their package.

We all agreed these terms were ridiculous. We could not understand how the State was allowing these terms to exist in a legislatively mandated pension program.  Our combined conclusion was that no one at State level was aware of these terms.

Most likely the vendor went through a basic vetting process, but somewhere along the way, someone at the State level took a shortcut and didn’t delve into the details.  And, as they say, the devil is in the details, isn’t it?

I copied out the terms and pasted them into a word doc for easier reading.

Next, I call customer service for the vendor.  The customer service representative was an excellent professional, but she basically said there was no workaround for the required acceptance of these terms. You cannot complete the registration for the pension plan without accepting the vendor’s Terms of Use. 

She suggested a supervisor might offer better insight and a solution to my conundrum. She attempted to get a supervisor on the line, and, in the absence of an available person, took my contact information. As of this writing, two days later, no one from the vendor has responded to my inquiry.

I asked the customer service representative if I was the first person to raise this issue. “You are definitely the first person who has called while I’m working,” she responded.

And, there you have it, that’s the other shortcut-mentality problem. Because it is clear that many, many small business owners all across the state have registered for this pension plan and likely not read the Terms of Use disclosure.  If they did read it, they simply signed off without a clear understanding what it was they were signing, in this case, essentially abdicating several aspects of how they run their businesses.

I contacted the state Comptroller’s office and, to their credit they did respond by phone and email. But their response proved my initial suspicion that no one at state level had actually read this Terms of Use disclosure.

I pushed back on their email—where they essentially patronized me and told me to contact the vendor—with a long-winded dissection of the argument I was making, and I included a PDF of the copied out Terms.

I’m waiting to hear back from the vendor and the State and I will update you all if and when I do.

But I hope that your takeaway from my love of reading disclosures is twofold.

First, read the disclosures.  It probably takes an additional 3-4 minutes of your time to do so. If necessary, show a disclosure to your attorney (every small business everywhere should have a relationship with a good business attorney, and, if possible, have one on retainer for just such situations).

Second, there are no shortcuts!  

How many business owners simply “accepted” these ridiculous Terms of Use disclosures to complete and comply with the state-required registration simply to “get it over with?”

We don’t know if or even how this vendor could possibly enforce these three paragraphs, but acceptance of the Terms of Use certainly gives them the right to do so, and to impinge on the efficient running of YOUR small business.

Linda Rey and I would love your feedback on this article. Please email curious@auroraconsulting.biz with your thoughts, ideas, and criticisms. I have no ego about this stuff; and last I checked, we don’t bite!

#SimpleSenseForSmallBusiness #BusinessSense #BusinessCommonSense #SmallBusinessForDummies

#Pizza #Shortcut #TermsOfUse #TermsOfService #Disclosures #ReadingIsFundamental #SmallBusiness #Entrepreneurs

#SmallBusinessPension #SmallBusinessPensions #PensionPlans #PensionPlan #EmployeeBenefits #SmallBusinessPension #366Glitch #Glitch #SmallBusinessMistakes #Glitch366