Apply for Disaster Financing

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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.

Business Financing Documents Checklist

Stop worrying about what's required when pursuing a business loan for your small business. This list will indicate what a lender, bank, SBA, etc. will want to know about you and your small business if you're looking for a business loan. These are prudent documents that help tell your small business story. Without them, it's difficult for lenders to assess you as a risk when it comes to lending your small business money. This is NOT SPECIFIC to the SBA EIDL loan.

It Ain’t a Stimulus until It’s Law

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.

How to Apply for an EIDL Loan

An updated sample of the EIDL application with Trevor's commentary on what changes the SBA has implemented when underwriting your EIDL loan.

Submitting documents to SBA

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.

For a Smooth Ride

7 Tips to Submit Documents for Your EIDL Application

Grab these 7 tips to better prepare you on how to submit you documents to the SBA. You have to guide SBA to an approval. We've seen that they don't try to make it work if something is confusing or sloppy; they easily decline.

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.

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.

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.

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

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? Our EIDL Blueprint is a guide for you to work through this process.

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!

Summarize your Finance Package

Summarizing your finance package can help to prioritize how your banker reviews your financing request.

We recently submitted a client’s financing request to one of the Lenders on our lending matrix.  Our Lender Rep. said, “Holy cow, you guys are on top of it with your summary. Not many brokers make it this easy to review the package.”

We made it easy because the client provided us with their financials. The financials were comprehensive. It’s a multi-million dollar corporation and we’re at the early stage of presenting to the lender. We want to show something that’s easily digestible. We want to ease  the process for the lender to give us a prompt review and tell us their interest in offering the financing.

Summarizing your financials is easy to do.  When you have a lot of line items that lead up to one type of deduction or one type of income source, simply summarize it. Drop it down to as few lines as possible so the lender can do a quick review and say,  “Okay, I see the picture here.”

The Lender doesn’t need to know the granular line-by-line details at this early stage; you want the Lender to give a fast review to gauge their interest. If the Lender expresses interest and offers a Letter of Intent for the financing, you can present the more detailed financials with your full loan application package.

For each client financing request, we write a summary statement. We present a one or two page statement describing some background on the business, the reason for their financing request, and, in bold, large font, the amount of our financing request.

Our presentation package for the initial Lender review is compact, yet complete.  The “first glimpse” by a Lender is sufficient to tell us if that particular Lender is the right fit for our client’s request, or if we need to locate a different Lender.

Watch our Financing Fodder YouTube playlist to understand what you’re up against when applying for a business loan. 

Download your “Homework”. You’ll thank us later

Stop worrying about what's required when pursuing a business loan for your small business. This list will indicate what a lender, bank, SBA, etc. will want to know about you and your small business if you're looking for a business loan. These are prudent documents that help tell your small business story. Without them, it's difficult for lenders to assess you as a risk when it comes to lending your small business money. This is NOT SPECIFIC to the SBA EIDL loan.

COVID-19 Recommendations For Your Business Survival

We were recently invited to attend a professional event as guest speakers. At first we thought we would attend via video conferencing. We then discovered that the event organizers expected us to physically visit their office to participate in the event. This raised serious concerns for us, especially since Trevor was ill with COVID-19 over the Summer.  We sent an email to the event organizers expressing concerns and asking a series of questions about their safety protocols.

As soon as we hit the “SEND” button, we realized they could have been more proactive in providing information to us FIRST about the safety protocols. Thus was inspired the following advice to our business owners. We hope you will find this useful. We welcome comments about this advice.

DO MORE FOR YOUR CUSTOMERS WITH YOUR COVID-19 SAFETY PROTOCOLS AND MESSAGING

The time is right for you to help your customers with concerns about visiting your business. Step up your safety protocols and your message about those protocols. Many more Americans are aligned with recommended safety guidelines including mask-wearing and social distancing. As a business trying to survive through this pandemic, get the word out to more people that you understand their concerns.

With the ongoing COVID-19 crisis your customers have concerns about meetings outside of their home or office. Be proactive in your understanding of their concerns. Apart from any local, State or Federally mandated safety protocols, determine how you can add to those fundamentals. If you’re not required to provide free masks, do it anyway. If you’re required to have a certain size of plexiglass divider, install larger dividers. If you’re required to have a specified number of hand sanitizer stations, add more.

You can’t really go “over the top” during this pandemic; the more you do to acknowledge the concerns of your customers about their own safety and that of your employees, the better the likelihood of increasing your customer attendance.

Once you’ve done that, then you need to “go tell it on the mountain” and broadcast the level of protections you’ve implemented.

Get the word out through every channel possible. Your messaging could include a phrase like this: “We want to provide you with assurances of safety protocols before you visit our store/restaurant/office. We want you to feel safe during these uncertain times.”

With messaging like this, you are both acknowledging the “pain points” that many people are feeling and you are increasing the numbers of customers likely to visit. It’s not enough to attract customers who already feel more comfortable going out and about during the pandemic with less anxiety; you need to pry the other, more anxious customers out of their protective environments.  Your message and your protocols will accomplish that goal.

Take a proactive stance that can only raise your customer’s confidence in your attempts to keep them safe. We have some suggestions for advance messaging before a customer visits your office/store/restaurant:

  1. Consider providing a list of the safety protocols you’ve implemented. On the list, note which ones are government recommended and which ones you’ve added for the extra level of caution.
  2. The next suggestion is a really difficult concept because you are acknowledging the customers’ concerns in a way that many businesses fail to do. Essentially, you’re going to remove some of the burden of safety precautions from the customer.

While it may seem that the following questionnaire might frighten away people, we believe the opposite to be true: you will actually attract more customers.

Understand that the vast majority of Americans are already worried about being infected with the COVID-19 virus. Ignoring that concern, assuming that everyone is taking precautions into their own hands or trusting a business with only minimal safety protocols is a fatal mistake for a business trying to survive the pandemic.

Become a “partner” with your customers by acknowledging their worries. Create a dialogue to demonstrate your intense interest in their safety and that of your employees.

We recommend that you include in your messaging these additional information points about your focus on the safety of your customers and employees:

  • Describe how many other people will be in attendance on the day of the event/meeting/reservation, including before and during your customer’s visit.
  • Provide detailed descriptions of the protocols in place currently at your business.
  • Provide a diagram of the business space demonstrating the measurements in relation to your customer’s ability to maintain social distancing. Note the plexiglass and hand sanitizer locations on the diagram.
  • We recommend you send a questionnaire to customers either before they attend a meeting at your office or visit your store/restaurant. Make this questionnaire part of your safety protocols in advance of the customer’s visit.

We know that many businesses are providing a short form of this questionnaire only at the moment of entry. In our opinion, while this is compliant with recommended guidelines, it doesn’t do enough to soothe the worries of many more people. And you want to attract as many customers as possible to survive this pandemic.

We’ve set up a minimal questionnaire. You’re welcome to copy this and use it along with your local, State or Federally-mandated questionnaires:

Please REPLY to this email with your answers to the following questions so that we can assure your safety of you and the safety of our other customers:

  • What is your personal opinion on mask-wearing requirements? 
  • Do you wear masks constantly, occasionally, rarely, or never?
  • Have you been diagnosed with COVID-19 or been in proximity recently with someone diagnosed with the virus?
  • Have you attended a social or professional event with more than six people in the last 30 days?

We recommend you provide this questionnaire, along with the list of safety protocols at the moment a customer confirms attendance at a meeting or even when they make a reservation at your restaurant. We know that many business owners may be fearful that such communications may actually scare customers away. Frankly, we cannot imagine how your interest in clear communications and a dedication to customer/employee safety can be more frightening than the actual COVID-19 virus!

Remember that you want to attract the customers who are taking extreme precautions. They may even be the customers reluctant to venture out of their homes.

Wishing you the best during these difficult times! Stay safe, stay well.

The Truth About Credit “Repair”

The most fundamental truth and reality check is this: a consumer cannot “remove” an account that is legitimately your account that is showing on your credit report.

While the account may appear to removed during the dispute process on the report provided by the credit bureau, the reality is that account is most likely to return to a credit report at some time in the future because it’s your account.  This is true whether it’s a positive or negative account.

In other words, if that account was truly yours to begin with, it’s going to reappear at some point on the credit report.  The confusion arises from the dispute process. During the dispute, the credit bureau is required by law to remove the disputed account from the credit report while they investigate the validity of the information with the original creditor.

Often, the bureau provides an updated report showing the removal.  And the investigation process, required to be only 30 days by law, often takes longer. Thus, the credit bureau “extends” the 30 day investigation period, and representing to the consumer that the information has been removed during the investigation.

This is the part where you need to pay attention.

This is one of the major frauds of the entire credit repair concept.  Once the credit bureau receives the accurate information from the original creditor, that account goes back onto the credit report.

A credit report can only be “repaired” to the extent that incorrect information can be amended to accurately reflect:

  • Correct status of an account (such as paid)
  • Removal of a duplicate account (often happens when a minor discrepancy in account balance or account number is reported by the creditor)
  • Removal of an account from a family member with the same name that appears on your credit report (John Jones Sr. mortgage appears on John Jones Jr. report)
  • Correct name misspellings or home addresses, and other personal identifying information of that nature.

Closed accounts aren’t necessarily the problem with improving a credit score.  That’s only one component of the overall scoring algorithm. What most consumers with decent credit misunderstand is their use of their current accounts. Such as, the more legacy accounts you have open and active today, with 50% or less utilization (relative to credit limit) and an on-time payment histories, will generate a better score.

Even with a higher utilization of 50% or more on several revolving accounts, assuming 3-5 active accounts with two years or longer histories and active use, scores can be very good and even excellent.

Please reach out for any further clarification. This is where we see most consumers flail with thinking through the process of “repair” and/or hiring someone to manage the minutia, which will only result in frustration and regret.

When we work with our business financing clients, we include a merged credit report with Classic FICO scores from Experian and Equifax as part of our qualification process from the very beginning.

Most Lenders won’t run a credit report until late stages of the loan application process. Our method helps us to understand and advise the business owner of any challenges on the credit report that may impinge on our ability to secure financing from a Lender.

Trevor, our Chief Financing Rock Star, was a Mortgage Banker for 30 years; credit is one of his areas of special expertise.

Download our E-Book, “Rebuilding Your Credit After COVID”.

Maybe you haven’t filed for bankruptcy; you will still pick up some tips in this ebook.