Ambiguity and Uncertainty

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Ambiguity and uncertainty are not words that Small Business owners embrace in their daily vocabulary. Even fishing professionals, sailing the chilly vastness of the North Atlantic in search of Cod, Haddock and Mackerel, don’t use those words. They set out on their fishing forays with a sense that they will find fish using their experience and knowledge, helped along by some modern technology.

Call the SBA with a question that requires a definitive answer, though, and you get an uncertain or ambiguous answer. Call multiple SBA representatives with the same question and get multiple answers.

Small Business owners have come to rely on the SBA during the COVID-19 pandemic to provide a vital financial lifeline to keep their businesses alive as they struggle with the various challenges of the pandemic disaster. When a Small Business owner asks questions, whether they’re general questions about the EIDL process, or specific questions about the Small Business’ EIDL application, they expect specific and hopefully detailed answers.

Question to the SBA: “Now that the loan will be declined for Reconsideration because the IRS hasn’t processed the tax return, how long does the applicant have to file another Reconsideration?”

I don’t even remember what the answer was because it was so vague and ambiguous.

“Good morning SBA, what is the current turnaround time, on average, for EIDL Reconsiderations?” or
“Hello SBA, if I file a Reconsideration request today, how soon can I expect that my file will be assigned to a Loan Officer at the Reconsideration team?”

The Small Business owner cannot get reasonable or certain answers to these questions.

Trevor worked in retail electronics in the 1980’s in customer service. When a customer brought a VCR or stereo system in for repair, he could provide the customer with a reasonable expectation for turnaround time for their repair. Even if they had to order parts for the device to repair it, they could know within a reasonable range of time, when those parts were due to arrive and when the technician could be expected to complete the repair.

They knew the repair intake process, the repair tech servicing queue, the quality control check process, and even when the product was on the truck for delivery back to the store for customer pickup. And this was with electronics repairs where anything could happen with the electronic device once it was on the repair bench and the tech tried to solve the repair problem.

Customers had a reasonable expectation to receive unambiguous information about the repair process.

“Hi there SBA! Can you please give me a status on my EIDL Reconsideration file?”
The Answer most often: “In process.”

What does that mean? Where in the process is the file? Has a Loan Officer reviewed the tax returns, read the transcripts from the IRS, etc.???

As a Mortgage Banker, Trevor knew every step of the way where the Applicant’s file was in the loan process: appraisal on order, appraisal received, verifications received, submitted to Underwriting, quality control review, clear for closing, and etcetera and etcetera.

While writing this blog, one of our clients for Reconsideration sent me a text message,
“This is like the old Heinze ketchup commercial, ‘Anticipation, it’s making me wait.’ Guessing no news is good news?”

When a Small Business owner begins their business day, they do so with a clear understanding of how their business operates, what they have to do to achieve their business goals, and their certainty in their methods for success. When they run up against the constant lack of clarity and certainty with their urgent EIDL financing requests at the SBA, their COVID crisis anxiety increases exponentially.

This is unacceptable.

The Small Business Administration, in its mission to advocate for Small Business, needs to do a spectacularly better job of providing clarity and specificity and to remove ambiguity and uncertainty from the process.

If you would like to schedule a free 15 minute phone consultation to review, resolve, ruminate about your EIDL loan, please schedule a call here.

3 Confusing Errors with the SBA

1. Was your EIDL Loan Declined for “Unverifiable Information?”

We’ve seen the latest SBA reaction to new EIDL applications and EIDL Reconsiderations: They decline the loan due to unverifiable information. Based on conversations we’ve had with SBA personnel and documents we’ve submitted, this appears to be mostly the SBA’s way of preventing fraud on these loans by requesting additional levels of documentation, essentially to prove it’s a real and legitimate business and not a fake farm in Maine.

Your best course of action follows the advice we continually give: Be patient and persistent with the process. We know you’re desperate for the money and in our professional opinion, SBA is overreacting to fraud by making all the legitimate businesses jump through hoops to get this desperately needed funding.

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Be prepared to submit the following:

  • 2019 tax return
  • Signed IRS 4506T
  • SBA Form 2202 Schedule of Liabilities
  • Driver’s License
  • VOIDED check

Be prepared for other possible verifiable information about your business such as:

  • Articles of Formation
  • Proof of filing your EIN with the IRS or DBA certificates or other registrations with your town, city, county or State
2. How to submit your Driver’s License to the SBA for your EIDL loan or Reconsideration

Since December, we’re seeing more and more that SBA Loan Officers are requesting an image of your Driver’s License by way of an actual smartphone photo that you snap and email directly to the Loan Officer. In other words, they won’t accept a PDF. As with our other video about “unverifiable information” this appears to be yet another level of fraud prevention on the part of SBA to confirm that you are a legitimate and real person.

3. Wet Signatures and your SBA EIDL Reconsideration

More and more since February, on the many Reconsiderations we’re working on, the SBA loan officers are requesting an ink or “wet” signature on forms and documents you submit. In other words, they’re not accepting electronic signatures. For the average Small Business Owner, this might not be much of a hassle, unless you don’t have access to a printer and scanner.

Many folks these days don’t. It’s certainly inconvenient for our process at Aurora Consulting since we’re busy assisting our clients on their Reconsiderations and preparing their documents and sending to them for electronic signatures so they can keep running their business to keep their business alive during the pandemic.

As we have always stated in our documents submission videos for the SBA Reconsiderations: Be sure you sign and date your forms and now, more than ever, sign with a pen, scan it and submit it.

Information keeps changing because procedures keep changing.

You are welcome to book a free 15 minute consultation with our office to review anything that is keeping you up at night or has you so confused, you’re not sure what to do.

Tracking Receipts for Your EIDL Funding

The question posed by an anxious Small Business Owner: “Do we have to turn in receipts for everything we spend on the advanced GRANT? If I get it, I’m scared to make sure I document everything properly that I need to. How are you spending yours? I’m unsure where I can use it and what’s off limits.

Even though the “Advance” technically doesn’t have to be repaid, it’s still considered part of the EIDL program by SBA.

Therefore, in common sense terms you should keep records and receipts. In general business terms: Why would you NOT keep records and receipts? These are tax deductible items after all since they’re expenses against your business income. AND…tracking income and expenses is an essential monitoring tool to grow a business.

How can you know if you’re earning and growing if you’re not tracking income and expenses?
These are the reasons why it makes perfect business sense to track receipts and to keep good records.

Our opinion: There’s been so much confusion around these programs, mostly due to SBA’s terrible messaging and lack of clarity on these very questions. It’s disgraceful that we all have to hunt around the internet to collect “anecdotal” evidence from other Small Business Ownres to educate ourselves about the important fine points of these programs.

There should be a simple to read guide on the SBA website that anticipates and answers these questions.

We’ve had clients telling me since last April how they’re “terrified” of using their EIDL monies incorrectly. That’s an absolute shame.

In the early days we were more forgiving of SBA’s failures because, well, it was COVID and EVERYONE EVERYWHERE was overwhelmed. But a year into this thing you’d think SBA would have gotten its act together, especially in the light of their allocating SBA staff to contacting EIDL Borrowers for “Resolution Letters” and “Hazard Insurance” (good luck getting a definition of what that’s supposed to be!).

How about, instead of wasting tax dollars on staff salaries for that nonsense SBA allocated those folks to processing the loans? Or that they invested tax payers’ money on creating online materials that’s accessible to every Borrower and interested prospective Borrower with clear, detailed information on the EIDL and PPP programs?

Short answer: The terms of the EIDL Agreement are clear: receipts and records can be requested by SBA in the future.

Seriously, if we ran our respective businesses this way, we’d be OUT of business.

YOU Tell the Bank the Amount of Your PPP Loan

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Disqualified? Thank you Politicians!

The Second Round PPP loan and the Targeted EIDL Advance both require businesses to prove their revenue reduced in 2020 from 2019 levels. But many businesses created a smart, creative “Pandemic Pivot” and their revenues are either the same as 2019 or maybe higher. Thus, they are disqualified!

We’re going to see a lot of folks have this problem. Frankly, we’re mad angry at the entire “25% and 30% reduction in revenue” required under the Second PPP and this targeted advance. It was a political compromise for the morons in government who didn’t want to step up and provide proper assistance to American Small Business Owners.

Why should you, or any other Small Business Owner be disqualified from a much-needed program simply because you were smart enough and creative enough to “pivot?”

That doesn’t take away the fact that COVID is ONGOING and the harm to your business—with or without a pivot—is ongoing.

It’s so ridiculous. And, yes, we’ve dedicated this to today’s “Trevor Rant Thursday!”

PPP Application: Who Underwrites The Loan Amount? THE BUSINESS OWNER DOES —> NOT THE BANK!

FYI: the banks, the loan officers, they are NOT supposed to re-underwrite your PPP loan application! They are simply supposed to verify you have submitted all pertinent documentation. Period. This is a common misconception!

The PPP program is a “self-certification” program, including calculating the math to arrive at the loan amount on the application.
Banks make us nuts in oh so many ways.

Schedule a call with us to review what is keeping you confused and possibly up and night wondering how to manage all of this nonsense!

Reconsideration Step by Step

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Please find below our point by point recommendations on how to to submit your Reconsideration request to SBA:

  • NEVER file a 2nd application. You must only submit a Reconsideration request.
  • Send an email to PDCRecons@sba.gov with your request
  • In the SUBJECT LINE put: “Reconsideration: EIDL #XXXXXXXX
  • In the body of the email state simply:
    I hereby request a Reconsideration of my EIDL Loan #XXXXX.  Please find attached the following documents:”
    (
    LIST YOUR DOCUMENTS)

Documents to include:

  • Credit Authorization letter (see below)
  • Credit Explanation letter (see below)
  • IRS 4506T
  • SBA Form 2202 Schedule of Liabilities
  • Business Plan summary (see below)
  • Business Revenue Projection (see below)
  • VOIDED check
  • 2019 Federal tax return (all pages)
  • 2020 DRAFT tax return (all pages; indicate DRAFT)
  • Clear, color scan of front and back of Driver’s License

Your Reconsideration letter should be SUPER SIMPLE. Don’t overload the Loan Officer with details of your struggle.
Keep your explanation to a few concise sentences, such as:
My business was a new enterprise. We were beginning to produce and sell product when COVID-19 caused a severe economic injury.  We have pivoted our Business Plan to adapt to the challenging circumstances of the pandemic (see attached Business Plan Summary and Revenue Projection). We need assistance from the SBA EIDL program to help us to move forward and survive the pandemic. If we do not receive this assistance we will likely fail as a business. If we fail, our employees will be out of work and our business will no longer contribute to the fabric of the American economic community.

  • CREDIT AUTHORIZATION wording: “I hereby authorize SBA to obtain an updated credit report for my EIDL Reconsideration.
  • CREDIT EXPLANATION: Do not discuss your credit score.  Simply address the challenges in life and/or business that affected your ability to pay credit accounts on time.  For example: “In early 2019 I experienced severe financial crisis due to (DIVORCE/MEDICAL/JOB LOSS/ETC).  I have worked to improve my credit.
    KEEP your explanation short, and concise. The Loan Officer will not “judge” you; they simply require an acknowledgment  of your previous credit history problems.
  • Business Plan Summary: Keep it concise and explain the changes you made to adapt to the pandemic and how your business will succeed with these same challenges over the coming 12-24 months.
  • Business Revenue Projections: Broken down by Quarter with annual totals for the next 12 months.
  • SBA Form 2202

Be sure to include on EACH explanation letter your full name, Business name, Business address, EIN and EIDL #.

Sign and date EACH document, including tax returns. WET signatures are preferred.

Next steps after submitting:

After 5 calendar days, call SBA to confirm receipt. At that time SBA Agent might give you feedback on status, but probably too soon.
Be sure to check SPAM folder as SBA emails often wind up there
Be patient with the process. Timelines for Reconsiderations can be all over the map: days, or weeks, or months.  Patience and persistence are the key characteristics of success with SBA EIDL Reconsiderations.

I hope you find this information useful!  If this process seems overly complicated or onerous, our Consulting program covers all aspects of Disaster Relief Financing, including Reconsiderations, and PPP loans, State and Local Grants and any other Stimulus programs to help a business to survive this horrible disaster.

Schedule an appointment to review how we can assist taking your mind off the minutia and the distress out of your day.

Calm, Cool Heads Collect During COVID

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A word (or two, or more) of advice from a financing professional of 30+ years: We strongly recommend, before you act out of desperation and anxiety, please take a moment, slow down for a moment and take care of how you handle your decision-making process when applying for the second PPP loan and any other Disaster loans.  The money’s not going anywhere.

Back in April, we managed 25+ businesses for EIDL and PPP applications. We now have close to 100. At the time, when The CARES Act rolled out we waited before submitting applications. As a result, our clients received substantially more money than if we used the “math” and other guidelines in the first days of the roll out.

If you scroll any online groups specialized in disaster financing, you will see all the confusion among business owners about the program.  There’s no clear guidance on the SBA website.  There’s no clear guidance from Lenders/Banks no matter how good they relay their message.

We’ve had so many calls with one of our trusted lender resources about the placing of new PPP loans either with his bank or elsewhere. This is the professional who, last April, provided us with the final ACCURATE guidance on how to calculate PPP application numbers.

We like the Carpenter’s Rule: “Measure Twice, CUT Once.”

Take your time; take care with your applications.  Trevor followed this rule for his 30+ year career as a Mortgage Banker and it helped him to literally make Dreams come true for First Time Buyers.

For our part, we haven’t submitted a single Forgiveness application yet for our clients because we’re waiting for the new Legislation to kick in which guides Forgiveness NOT to subtract the EIDL Grants from the Forgiveness amounts.

We encourage you all in the strongest, most honorable and passionate and sympathetic terms possible: SLOW DOWN. Take your time and apply when you have all the facts.

We know that it is worth the wait.

Sample Wording: Submit a Reconsideration Letter to Increase Your EIDL LOAN AMOUNT

We've been a broken record to remind people not to submit a 2nd or Duplicate EIDL Loan Application for the SAME DISASTER, i.e. COVID-19

 

Tax Refund vs. Eligible Income

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With Tax Time soon approaching, we feel obligated to remind you of our continued advice about the best methods to prepare your tax returns if you plan on applying for Business Financing in the future.

With Trevor’s 30 years as a Mortgage Loan Officer, he saw this time and time again. While the tax professionals and CPAs might do a marvelous job of getting a Self-Employed Business Owner a GIANT REFUND (or simply lowering the tax bill) these folks never seem to have a discussion with their clients about the long term ramifications of such deductions/lowered income.

The “look back” period to qualify for a mortgage is 2 years; for a business loan of any type, it’s 3 years. That means the Lender will take those “Bottom line” numbers and average them for the time period in question (2 or 3 years) and create a qualifying income. When Schedule C shows a loss or minimal income over the time period, well, do the math. It ain’t pretty.

For a Self-Employed Borrower with a Schedule C (including many LLCs), lowering the net income on Line 31 by deducting oodles of expenses lowers the potential loan. IRS does not “require” anyone to deduct expenses; this is an “option” which helps to lower tax liability. BUT it also reduces a Borrower loan qualification by lowering income.

Whenever you complete a tax return you don’t have to deduct expenses! This feature of a tax return allows you to lower your tax liability.

BUT IT ALSO LOWERS YOUR INCOME.

And for any Loan you may request in future (up to three years later) the Lender will use that bottom line income to calculate your qualifications.
Take extreme care and think long term strategically before making a final decision on a tax return.

Be sure to watch our YouTube video about the “LOOK BACK” period!

We are scheduling FREE 15 Minute Phone Consultations to review disaster financing eligibility and qualifications.

Grab Our EBOOK to REBUILD Credit | "Repair" is a Misnomer

Please note, if a "professional" charges a fee to "repair" credit, please beware. You cannot REPAIR credit, you can rebuild. We discuss these strategies in this EBOOK after 30+ years of Mortgage Lending and reading THOUSANDS of credit reports.

5 EIDL Reconsideration Updates 

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We’re working on quite a few Reconsiderations for our clients. Here’s some advice for you all based on our recent conversations with SBA Agents and documents requests from the Reconsideration Team at SBA:

  • IRS 4506T: The IRS is requiring a “wet” signature on the form. That means you have to physically sign a paper version with a pen, scan it in to your computer and submit. We’ve been using DocuSign for our clients’ forms successfully for the most part, but recently hit a snag with one file where the Reconsideration Team kept requesting a new 4506T. In my conversation with an excellent SBA Agent, she revealed this concept of the “wet” signature. Trevor was a Mortgage Loan Officer prior to our Consulting business and we’ve used DocuSign for years. Oh. Well.
  • Revenue Projection and Business Plan. We’ve noticed from posts in a Facebook Group and now with two of our own clients that SBA is requesting a revenue projection for the next 12 months. Between you and me and the wall, I’m not sure how any Small Business can project revenue during an ongoing pandemic, but SBA is asking for it. We haven’t determined yet how we’re going to respond to this request. The “Business Plan” aspect can, according to SBA, be a simple narrative of how you’re keeping your business running.
  • SBA changing over the online portal the weekend of JAN 15-17. We’ve already noticed glitches in the online portal over the last few weeks. One SBA Agent opined this is probably the result of the system changeover. To that end, we recommend not submitting a new EIDL Application, or uploading requested documents through the portal, or submitting a new Reconsideration until after JAN 18. That’s our strategy for our clients, anyway.
  • Funding Approved EIDL loans. For most of the past 10 months we’ve seen our clients receive funds within 48 hours of signing Closing Documents. In two instances in the past two weeks, funding took 5 calendar days. Nail-biting continues during the disaster.
  • Continuing confusion of the EIDL Grants. We read an excellent article in an NFIB blog yesterday. The author sought to clear up this ongoing confusion about the $10,000 CARES Act EIDL Grants that many businesses either did not receive or received only partial amounts. Add to this the confusion over the NEW EIDL Grants under the Second Stimulus Legislation.

While we believe the NFIB is a “trusted resource” we defer to our own Chief Financing Rock Star, Trevor Curran who has 30+ years as a Mortgage Loan Officer originating Government loans: wait for the official Governmental guidance.

SBA has not yet released any rules regarding these EIDL Grants. There’s no update on the SBA website, and nothing in the email newsletter we received this morning from our SBA Regional office. While your anxiety over getting this much needed money continues (we feel your pain, we were shorted the Grant too!), our advice is to continue waiting for the official guidance from SBA on this matter.

We’re happy to share our professional experiences to provide vital—albeit anecdotal—information that you can use to achieve a successful result with your SBA EIDL and PPP requests! We hope this information helps!

For a free 15 minute phone consultation, you can schedule your call here.

Sample Wording: Submit a Reconsideration Letter to Increase Your EIDL LOAN AMOUNT

We've been a broken record to remind people not to submit a 2nd or Duplicate EIDL Loan Application for the SAME DISASTER, i.e. COVID-19

Apply for Disaster Financing

Here we outline several fundamental concepts you can follow that helped Trevor to successfully submit hundreds of approved mortgage applications. Trevor was a Mortgage Loan Officer for 30+ years; we continue to use these principles now to assist Small Business Owners like YOU to get SBA and other Disaster financing:

📌 ALWAYS Apply. Don’t “disqualify” yourself.

📌 Don’t leave anything blank. When something doesn’t apply to you on the application form write “N/A”. If application requests a numerical value and it’s a ZERO then enter “0”.

📌 Use the last four digits of account numbers for credit accounts. The Loan Officer will see the credit accounts on your credit report. Putting the last four digits helps match your application information with the credit report. In other words, don’t enter “FirstBank VISA”

📌 Enter full and accurate account numbers for each bank account in the assets section of an application. Whenever possible, enter type of account “checking” “savings” etc.

📌 The more complete an application, the better your chances of approval and the more efficient your process. TREVOR’S GOLDEN RULE ABOUT APPLICATIONS: Your Loan Application is the “roadmap” the “instruction manual” that guides the lending decision-makers about your qualifications.

📌 Review and revise your application for accuracy (including adding up the math and correcting spelling mistakes. Use the “Carpenter’s Rule” when you complete an application: “Measure twice, cut once.”.

📌 Match your personal and business information EXACTLY to supporting documents. If your business bank account is under the name “Trevor’s Handsome Dude Pool Service LLC” be sure that’s the same name that appears on your application documents. Same with tax returns and other supporting documents. SPELLING COUNTS.

📌 FRONT LOAD the application. Find out what documents are required and submit them with the initial application whenever possible. Make the Loan Officer’s job easier, you’ll have a more positive experience as a result.

📌 Documents submitted in a quality format. PDFs only: NO PHOTOS! Clear, legible scans. Always try to “label” documents such as “ABCBank JAN 2021 statement” or “Trevor Driver License” Again: when you make the processing staff and Loan Officer job easier, you get a better result.

📌 NEVER TAKE NO FOR AN ANSWER. Be tenacious, be politely persistent. If a Loan professional or Lender provides a negative response, ask “Why?” and “What can we do to move this application to a favorable position?” and “What other information can I provide that helps support a positive decision for my application?”

Small Business is the BACKBONE of the American economy. Know that, own that, don’t let them tell you “No.”

The money is there for you to get it; your business deserves it. Feel no shame about asking for assistance to help your Small Business survive this horrible COVID-19 disaster.

Don’t forget to BOOKMARK this page to stay updated on our SBA Disaster Financing Updates.

Schedule a FREE 15 Minute Phone Consultation to review how you can secure the financing you’re entitled to as a Small Business Owner.

Don’t forget to BOOKMARK this page to stay updated on our SBA Disaster Financing Updates.

How to Apply for an EIDL Loan

We've compiled pages of Frequently Asked Questions for you as well as sample EIDL loan application for you to navigate the SBA disaster loan process.

It Ain’t a Stimulus until It’s Law

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SBA Failed the American Small Business owner during the COVID in the way it implemented the EIDL program guidelines as set forth in the CARES Act.

Under the CARES Act provisions for the Economic Injury Disaster Loan (EIDL), SBA was to provide a totally-forgivable Grant of $10,000 PER BUSINESS paid within 3 days of filing application for EIDL program online. There was never any requirement or provision of anything different from that simple language in the Legislation.

SBA subsequently and arbitrarily changed the Grant to a distribution of $1000 per employee, along with capping EIDL loans at $150k when they’re supposed to go up to $2M as per Congressional Legislation.

The $1000 per employee nonsense was exactly that, complete nonsense and a violation of The CARES Act and a capricious and arbitrary decision by SBA without direction or permission from Congress.

CONGRESS DECIDES HOW U.S. TAX DOLLARS ARE SPENT, NOT FEDERAL AGENCIES.

When taken to task in a Senate hearing, SBA Administrator Jovita Carranza and US Treasury Secretary Steven Mnuchin both replied like Ralph Kramden, “Hummina…hummina…hummina…” and meekly stated that they made these arbitrary decisions to change the program (and ignore Congressional mandate) because SBA was worried they would “run out of money”.

Imagine if the US Navy was in danger of running out of money? Would they stop sailing ships and flying fighters? NO. They would ask Congress for more money.

THAT is the most massive #FAIL on the part of SBA Administration (and Treasury, for their part) in not returning to Congress to request additional funding.

In making these decisions, SBA failed in its fiduciary duties to the American Small Business owner. FYI: In the currently proposed Second Stimulus Legislation, Congress made sure to hold SBA accountable by requiring definitive reporting deadlines that SBA must return to Congress to report on progress of the funding of the various programs.

You can watch the Hearing here.

We strongly urge EVERYONE to stop watching all the alleged YouTube experts expounding on the exact rules of the new Stimulus. When this is actually signed into LAW, SBA still has to create the RULES.  Until SBA creates the RULES, NO ONE can say with any certainty what they are.  Not me, not anyone.  We can only interpret what we read. I read the Legislation several times.  To Trevor’s practiced eye (30 years lending with Government programs), some language remains unclear and confusing.

Our interpretation—and that’s all it is—doesn’t mean a hill of beans until SBA MAKES THE RULES.  Instead of watching YouTube “experts” watch kitten videos.
It could prove to be a better use of your time.

EMAIL US with any positive experiences you have had, we would love to hear from you.

Schedule a FREE 15 minute call to review any complications you’re having with your disaster loans.

How to Apply for an EIDL Loan

We've compiled pages of Frequently Asked Questions for you as well as sample EIDL loan application for you to navigate the SBA disaster loan process.

Submitting documents to SBA

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CLICK on Image for VIDEO

If you’re submitting documents to the SBA, you’ll  need to do it the RIGHT way to ensure a smooth process! Here’s our advice (based on Trevor processing loans for over 30 years) on the best way to submit documents:

1. PDF ONLY. No photos, no other file types. With the volume of documents and applications they’re working on, SBA Loan Officers simply do not have the time to convert your documents to PDF. They’ll probably set it aside until they have time.

2. Separate PDFs for separate documents. A PDF of a voided check should be separate from a PDF of a photo ID and etc. When SBA has to separate your documents from a single PDF it slows down your entire process.

3. Label the PDF on your end. For example of a labelled PDF: “COMPANY NAME YTD Income Statement JAN 1 to SEP 30 2020” or “COMPANY NAME Voided Check”

4. List the documents you’re submitting in the body of the email. For example, SUBJECT LINE: “Company Name: Documents submitted DATE”. Then, in the body of the email: “Attached to this email: YTD Income Statement JAN 1 to SEP 30 2020, Voided Check, Photo ID”

5. We recommend using the NOTES App on your iPhone to scan documents. Ridiculously easy.

6. BEST Scanning app of all: “ADOBE Scan” which you can download to your smartphone from your respective app store.

7. When scanning with your smartphone, keep the document within the scanning borders. Most often the scanning app will give you a highlighted “border” for the document.

8. Always scan documents on a flat surface and scan straight, not slightly tilted.

Watch our WTF Wednesday video where we discuss why these are important.

Schedule a FREE 15 minute call to review any complications you’re having with your disaster loans.

Board Resolution Sample Wording & FAQs on Hazard Insurance

When your EIDL loan has been approved and you've accepted it, you will be contacted by the SBA for a Board Resolution Letter and/or Hazard Insurance. We've compiled information and sample wording to comply with these requirement. GET IT HERE.

Frustrated with Calling the SBA

We know how frustrating it is to spend time and energy following up with the SBA on the status of Your EIDL loan or Reconsideration request!

We’re sharing our experiences from having worked on dozens of EIDL loans and our interactions with SBA Agents. We want to you to know you’re not alone in your frustration, but also to help you to understand how the system works.

1. WE LOVE SBA AGENTS! Every call we experience an SBA Agent who is very professional and eager to help business owners obtain the EIDL financing they need to survive this pandemic.

2. SBA Loan Officers are, to quote an SBA Agent, “Working 15 hour days” on loan requests and reconsideration requests.

3. Okay, once you understand the value of the intrepid SBA Agents and how enthusiastic and hard-working they are, let’s discuss the frustrations of follow up.

4. We did a video on “How To Speak With An SBA Agent” we recommend you watch that for tips on how to make your follow up call.

5. Next, know that SBA Agents don’t always have a complete picture on your loan status. Their system has notes about your file’s progress with “Codes.” We don’t know what those codes are, but let’s hypothesize that a typical code could be something like this: “9837: IRS Form received” or “9822: Email sent to Applicant”.

Trevor has seen coding like this in his previous career as a Mortgage Banker. It’s an efficient way for a system to track the progress of a file.We’ve spoken to a couple of Agents who told us they don’t know what some of the Codes mean when a file is in the Reconsideration system.

6. Apparently, the Reconsideration Team works like a “Black-Ops” enterprise. SBA Agents can’t speak with them and their Codes can’t be deciphered by the SBA Agent you call for a status.

7. Beware of general statements made by an SBA Agent such as “Reconsideration processing times are 5-6 weeks.” Another Agent told us that is not true; she’s seen Reconsiderations take substantially longer. She said the other Agent should never have made that statement. Moral of the story: Take anything an SBA Agent says on general matters with a grain of salt.

8. Don’t think you’re going to call and get very clear guidance. The SBA is STILL overwhelmed with the number of new and Reconsideration requests. There’s a lot of moving parts, a lot of confusion, and long waiting times.

9. Remain consistently vigilant, and always polite. Check in regularly on your file. You won’t always get a definitive answer, but once in a while you might discover the SBA sent you an email that you didn’t know they sent! We’ve seen that happen…the email was sitting in the client’s spam folder. Other times, no such email was received. Moving parts. Confusion. Not quite controlled chaos.

10. Patience is a virtue. We know you need this money to help you survive this pandemic. We know the SBA is working diligently. We also know that sometimes some folks in an organization (Bank, SBA, etc.) get a file and it sits there waiting its turn because that person in the organization is overwhelmed, confused, slow, or, maybe, just maybe, even lazy. Think of the real world and how folks work in your business; the SBA is no different.

Contact us with questions or maybe with some good news you’ve experience contrary to our unabashedly vocal disappointment.

Schedule a FREE 15 minute call to review any complications you’re having with your disaster loans.

Small Business Must Roll the Dice

This comment in an online forum about SBA EIDL loans says it all about two key concepts:

“…who knows what this winter is gonna be like here so I’m afraid to give it back yet.”

The business owner has EIDL monies left over and had considered (oh so briefly) prepaying the loan with the remainder of the monies. And then the new surge hit.

Concept #1: Utilization of EIDL monies as a way to replace lost revenue for working capital due to the COVID-19 pandemic. There is no finish line; no concrete timeline; complete uncertainty.

If you have not used all your EIDL monies, we recommend holding on to the funds through the coming months. You want to have a better understanding of a “diminishment” of the COVID-19 pandemic to such a level that there’s no fear of upcoming possible lockdowns where you have to close your business. Likewise, to know there’s no upcoming lockdowns to gauge if you will have customers coming through the door.

Concept #2: “who knows what this winter is gonna be like…” speaks to the SBA’s continuing failure to recognize the drastic difference of this disaster from all “traditional” natural disasters. The EIDL processing guidelines and the Loan Agreement and the lack of clear, unambiguous guidance on how to use the monies from and EIDL all need to be addressed by the Administrators of SBA.

We’re eight months into this pandemic; that’s more than enough time for this Federal Agency to have created at the very least some better guidance on how to use the monies beyond stating, “Working capital” in the Loan Agreement.

Business owners are terrified to use the funds incorrectly, many of them saying, “I don’t want to go to jail!” This is absurd.

SBA! Please, please, please, we are begging your Administration, recognize the unique features of the COVID-19 pandemic disaster and modify your guidance for EIDL funds so that business owners can use the money without fear of contravening the terms of their Loan Agreements!

We’re all holding on out here for this disaster to end. We’re all holding on out here, trying to survive and keep our business’ doors open. We’re all holding on for more detail from SBA and a resiliency to the fact this disaster is like no other disaster in American history.

Contact us with some good news if you are in a position to know what is going on in the background of this nonsense.

Credit Advice: The Real Deal

We read an online article recently about credit and credit scores. The writer was complaining about how they couldn’t get approved for credit for a major purchase. He was denied due to a credit score of 575. In the article, he complained how this credit score is wrong, how the creditor who denied him must be committing fraud, and on and on. 

This article writer referenced a consumer-credit app that all too many people use, some “karmic” thing that purports to guide people on improving their credit histories.

Based on 30 years’ experience in mortgage banking and having read thousands of credit reports, my response to the author of the article and a commenter is below. We promise you, as you will see, credit ain’t a rocket science.

People in the world spend too much time focused on their credit scores, only to lead to the kind of frustrations experienced by the article writer referenced above. I’ve been giving this kind of credit advice for decades because we know it WORKS.

Our opinion is that consumers have been trained to spend entirely too much time focusing on credit scores. If you want a good credit report and good scores there are several basics to follow.

  1. Longevity counts. The longer your credit history (assuming on-time payments, no derogatory accounts, good utilization), the better your scores.
  2. You have 3-5 accounts open and ACTIVE at all times. Active means using that account every month: a car loan you’re paying, a credit card you use for groceries, a student loan (or more), a mortgage. Even if it’s only credit cards, 3-5 accounts is the standard for good scores in my experience.
  3. STOP paying off your balances to zero permanently and STOP paying off your credit card balances at the end of the month. Credit scoring relies on you actually USING credit. If your complaint is that you don’t want to pay the interest, fine, but don’t complain that your credit scores aren’t higher. It’s a scoring system based on USING credit over time. FYI: “time” does not mean monthly, rather over long periods of time, consistently. (See #1 above)
  4. Utilization. I know all the online “experts” say “Don’t use more than 30% of your available revolving balance.” What a bunch of scaredy-cats! We’ve seen thousands of credit reports thanks to Trevor’s financing career. He’s seen folks with up to 50% utilization of their available revolving balances with excellent credit scores. When you go above 50%, then it can get interesting. Depends on your overall credit history. Is it one account above 50%? Is it several? Did you just get a new house and mortgage? Did you trade in your leased-car last month? Yeah…interesting. (See #5 below)
  5. Credit is a “living breathing thing.” Not like as in a “monster” but certainly there’s an organic aspect to your credit history. There’s a lot going on there. That’s why it’s nearly impossible to control your credit scores no matter what all those “karma” websites will tell you. I have had many people I’ve worked with (including one right now) who are tweaking their credit based on what “karma” tells them to do with the flick of a finger on the screen of their smartphones. I just shake my head as I watch their frustration as to why in the longer term they’re not hitting the desired scores. There are no short cuts. A credit history determines your credit score. And a credit “history” is exactly that: a long-term project. (See #1 above)
  6. Yes, pay your bills on time. Duh. Note, a “late” payment reported to a credit report is for a payment 30 days late or more. If you pay two days after the due date, but within 30 days, you’ll incur a late charge, but not a derogatory “30 day late” mark on your credit report.
  7. If you’re planning on big purchases in the next few months, don’t close any accounts and don’t pay them down to zero. (See #3 above). If you’re not planning on big purchases, close those accounts you’ll never use again. But remember to keep open 3 to 5 accounts current and active, keep your utilization of revolving credit below 50% of available balance. Don’t zero out your accounts. Pay your bills on time.

You now have your open source access to how your credit scores are calculated. Now, with all that extra time on your hands from NOT monitoring your credit scores, order a pizza, pay for it with a credit card, give the delivery person a generous tip, and kick back and watch “The Queen’s Gambit” on Netflix (it’s AWESOME).

If you want to rebuild your credit, we’ve written an EBOOK with tactics and strategies to begin rebuilding your credit.

Here is my response to the author of this article:

I’ve [Trevor] been in finance for over three decades and I’ve read thousands of credit reports. 

Here are my observations and advice:

STOP wasting your time with that karma nonsense. It’s a rabbit hole that, in my professional experience, does very little to assist consumers with valid credit guidance.

Credit scoring and credit reports are “organic” to a certain extent: many moving parts shifting each month. That’s why the “karma” advice and others like it can’t work correctly all the time, or in the long term.

Credit scores update once a month. Period. Not daily, not weekly, not based on activity. Creditors choose to provide reporting information to the THREE credit bureaus (Trans-Union, Equifax and Experian). The accuracy of that information can often be questionable.

No consumer anywhere can obtain the same credit scores that we use in the financial services field. We use “CLASSIC” FICO scores. Even should you obtain your score from the FICO website, it’s not a CLASSIC score. 

I’ve seen differences of as much as 100 points in either direction between the consumer-access credit scores and CLASSIC scores.

Financing decisions are made using CLASSIC FICO scores by pretty much every credit-decision maker everywhere.

Creditors of all sorts (mortgages, car loans, credit cards, etc.) have varying criteria from one creditor to the next to determine creditworthiness.

Visit www.consumer-action.org for great, legitimate, free advice on all things credit related.

NEVER ever, ever, ever, ever, ever, ever, EVER pay anyone to repair/restore/add trades to your credit report. I’ve met too many people over my career who have done that only for me to tell them months later how terrible their credit is and, no, I cannot approve them for a mortgage to buy a house. 

They respond with the kind of outrage you express in the article. Those credit “repair” people are scams, IMHO. I don’t care if they now appear as “legitimate” on the FTC website: I haven’t seen a single case where those types of services assisted a consumer in the long term. 

And credit is LONG TERM.

As for people offering to add trades to your report: dunno, but that sounds incredibly fraudulent to me.

Grab Our EBOOK to REBUILD Credit | "Repair" is a Misnomer

Please note, if a "professional" charges a fee to "repair" credit, please beware. You cannot REPAIR credit, you can rebuild. We discuss these strategies in this EBOOK after 30+ years of Mortgage Lending and reading THOUSANDS of credit reports.

Old News on EIDL LOANS

Linda Rey manages the marketing for our business financing practice. She recently posted relevant information on Reddit about our recent experiences with EIDL loans, both new applications and the Reconsideration process. A troll responded with, “Old news.”

COVID-19 is ongoing with no definitive end point in sight.

Old news” doesn’t describe the continuing inquiries we receive from anxious business owners. A quick scan of any relevant online forum about EIDL programs reveals the simple truth: business owners still struggle with EIDL loans they’ve obtained (utilization) and fighting for monies they need to survive.

The U.S. Congress and the Small Business Administration (The SBA) responded with amazing alacrity in the early days of this crisis to provide vital support to Americans and American businesses. Yes, there’s been tremendous chaos around those initiatives.

In our opinion, that chaos, specifically about EIDL program loans, arises from two sources.

First is the overwhelming number of requests. According to an SBA Press Release on October 28th, 2020, SBA has funded nearly 9 million loans worth $7 billion. Chaos or not, the SBA did an incredible job of helping American businesses with the two COVID-related loan programs, EIDL and Paycheck Protection Program (PPP).

Our second opinion about the chaotic state of SBA EIDL response focuses on the SBA’s internal operations mindset. We mentioned in our introduction the drastic difference between a natural disaster such as a tornado, flood or wildfire, and the COVID-19 disaster. This pandemic is like no other disaster ever experienced in American history. And yet, with all their heroics on the frontlines performed primarily by the amazing SBA agents, loan officers, and processing staff, the upper level SBA Administration applied standards more relevant to the traditional natural disaster phenomenon.

To this day, we are dumbfounded by the SBA’s Administration’s failure to radically adjust the thinking and ultimately guidelines and processes for the EIDL program.

As amazing as our Government’s response has been to the financial uncertainties of this pandemic, there is surely more assistance to come in the future. As of this writing there is no second stimulus package negotiated or finalized in Congress. It is our opinion this will change as the pandemic moves into the second year of human distress. With any future stimulus package there are sure to be improvements and revisions to existing SBA programs.

Presenting this information at this time, in our professional opinion, will help business owners understand the basics of the EIDL program in anticipation of just such changes. When you install a fire extinguisher in your house, you probably took a moment to read the directions, didn’t you? Hopefully, you’ll never need it, but a basic understanding of when and how to use the extinguisher will surely come in handy in the event of catastrophe.

We welcome any questions, comments or concerns you may have if it means some insight or assistance to help sustain your business.

SBA Reconsideration Team URGENT UPDATE

SBA now has a way to upload required documents for your Reconsideration request directly to the SBA website. Previously (as recently as the morning of October 21, 2020!), the SBA Reconsideration Team sent you an email with the list of documents. You would then email the documents and SBA could take up to ten days to upload your documents to your file.

With this new method, YOU upload the documents!

Remember: You can still apply for an SBA Economic Injury Disaster Loan (EIDL) through December 31st.

IF your loan was declined or you did not receive sufficient funds to help you through this crisis you can request a Reconsideration from SBA.

See our video on How To Request a Reconsideration, including How To Write an SBA Reconsideration letter.

Our client received the email and within an hour we had uploaded the requested documents. Notice in the email: the STATUS of your….has been UPDATED.

In this case, the loan had previously been declined by SBA.

We requested a Reconsideration on October 17th; SBA responded with LIGHT SPEED on October 21st.

In the screen shot of the SBA portal website, you can see the new TAB “UPLOAD DOCUMENTS.”

If we haven’t viewed dozens of these SBA portals we wouldn’t realize what this meant as there is no other guidance on the SBA website or by email. Unfortunately, we all have to figure it out on our own.

Here at Aurora Consulting, we are committed to providing accurate and timely information about the SBA Disaster Loan programs. Stay safe! Stay well!

Sample Wording: Submit a Reconsideration Letter to Increase Your EIDL LOAN AMOUNT

We've been a broken record to remind people not to submit a 2nd or Duplicate EIDL Loan Application for the SAME DISASTER, i.e. COVID-19

 

What To Do If Your EIDL Loan Was Declined For CREDIT?

Click on the image to view our 3-minute video

We’ve had many interactions and exchanges with the SBA about clients whose EIDL loan was declined due to a low credit score.

What can you do if that happens?

1. Ask for a Reconsideration. Often EIDL loans are automatically rejected by the computerized underwriting system. What you want is a human being to review your loan request. You get to a human by requesting a Reconsideration.

2. Prepare a Reconsideration letter. At the top of the letter include your name, company name, address, EIN (or SSN if you’re Self-Employed), and EIDL Loan number. REMEMBER: all your information must exactly match the information you inputted on the SBA website when you applied for the EIDL loan. If your name was not included as an owner or Authorized Preparer, then you cannot write the letter; only names that were inputted on the original EIDL application.

3. In the body of the letter, keep it short and concise. Request a reconsideration due to your credit explanation. Write a brief credit explanation in the next paragraph. For example, something like this, “The late payments on my credit report and the resulting lower credit score were directly a result of the COVID-19 pandemic. My income/revenue dropped dramatically and I could not pay my bills on time.”

4. Keep your credit explanation short. If you have any documentation that supports the explanation, be sure to include PDFs of that documentation with your request.

5. Sign and date the letter.

6. Send your request to pdcrecons@sba.gov.

Our advice is this: no matter how bad you think your credit is, do not lose hope. Request a reconsideration no matter what!

Here’s our video on “How To Write a Reconsideration Letter”.

Download our EBOOK on how to rebuild your credit. There are tips in this ebook that have been tested after reviewing thousands of credit reports after 30 years of experience in the mortgage lending business.

Sample Wording: Submit a Reconsideration Letter to Increase Your EIDL LOAN AMOUNT

We've been a broken record to remind people not to submit a 2nd or Duplicate EIDL Loan Application for the SAME DISASTER, i.e. COVID-19

Can I Apply For Another EIDL LOAN?

Click to View Video

We received this question on Twitter:
I already received an EIDL loan. Am I eligible to apply for another?

The History of the Economic Injury Disaster Loan (EIDL) PROGRAM was that it was established back in 1953. It was created for individual disasters declared in any one of the United States causing homeowners and business owners an economic injury .

For example, this month it may be a tornado in Ohio county. Two weeks from now it could be a flood in the state of Mississippi.

COVID-19 created its own unique disaster. The Small Business Administration (SBA) responded by offering an EIDL loan for the pandemic. We make this distinction because we want to answer this question accurately.

The fact is, you can apply for  multiple EIDL loans, according to the SBA as long as they are for different disasters that have affected you.

In other words, if you received a COVID-19 EIDL loan in April, but your county was affected by a tornado in September (and it’s declared a disaster area), then you can apply for another EIDL for the tornado disaster. We confirmed this with the Small Business Administration (SBA).

You cannot apply for more than one EIDL LOAN for the same disaster. However, the SBA has a provision for up to 24 months (or two years after the disaster), for you to request additional funding above the amount of your original EIDL loan.

Leave a comment below or schedule an appointment with us for a free consultation.

Let us know if this is helpful and what other disaster financing questions you may have.

How to Apply for an EIDL Loan

We've compiled pages of Frequently Asked Questions for you as well as sample EIDL loan application for you to navigate the SBA disaster loan process.