Repayment Of The COVID-19 EIDL

feature image for our BLOG: Repaying EIDL FAILS

Would it surprise you that SBA makes it shockingly DIFFICULT for BORROWERS to make PAYMENTS?

Since January of this year, we have been inundated by small business owners whose COVID-19 EIDLs were sent to the US Treasury in default status for collection actions by the government. The reasoning from SBA is these loans were considered unrecoverable for repayment, and therefore subject to official collection action. The loans were shipped over to the US Treasury, where a 30% penalty was added to the total loan balance.

Business owners in this position find themselves between a rock and a hard place. So many of the Borrowers who contacted us shared nightmare stories of how they tried to repay the loan only to be met with absurd incompetence on the part of SBA.

We dug deep in our attempts to help our Clients fight this egregious error.  

And we say “error” because so many of these loans should not have been sent for collection.  We’ve seen too many instances where it was SBA failures that caused the problem with the repayment of the loan. Notable issues we encountered:

1. SBA failure to properly notify the Borrower of the first payment due date and required monthly payment amount after the conclusion of a 30-month deferred payment period.  The emails that people received—IF and WHEN they received them—are so vague as to be a completely unacceptable method of notifying borrowers of their debt repayment obligations.

No account numbers. No hard and fast due date. No mention of the required monthly payment.

2. SBA sending notifications by USPS mail to the WRONG addresses. Even in the case of one of our own pandemic Clients where WE had changed the address with SBA and confirmed the change multiple times. Correspondence, including payment and delinquency notices, went to the wrong address. The business owner only became aware of the error months later when handed a pile of mail that had been collected at the wrong address for months.

3. SBA miscommunications by telephone and email when Borrowers contacted for assistance to either manage the repayment technology through the MySBA portal online, determine the actual start date of payments, or determine the amount of arrears so the Borrower could attempt to bring the payments current.

4. SBA failed to thoroughly notify ALL Borrowers of the special remediation program “Hardship Accommodation Program” which allows Borrowers who are facing financial challenges to receive SBA approval for temporarily lower payments.  An SBA Administrator, in a YouTube interview, admitted that SBA did not make a formal announcement about this program due to concerns that “the wrong people” would take advantage of it.

We encountered many other terrible errors committed by SBA in its poorly conceived repayment process for COVID-19 EIDLs, too many to list here.

If your EIDL was sent to US Treasury and you believe it was done in error, you must FIGHT with SBA to demand that SBA recall your loan to regular servicing and remove it from collection action at US Treasury.

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