SBA: The Painful Truth

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For more than 18 months we’ve processed EIDL files for our Clients. For 18 months we’ve dealt with the complete dysfunctional insanity known as the Small Business Administration (SBA). Today we’re sharing with you the “painful truth” of what you can expect with your interactions with the SBA.

We know there are many videos, blog posts, newspaper articles, not to mention SBA “good news” propaganda out there in the world. We know that millions of Small Business Owners are desperate to receive the vital funding available through the EIDL program. We know that, in the moment of truth when a Small Business Owner (SBO) receives ANY kind of notification from SBA, or any hint of activity or whisper of progress, the typical SBO loses their minds, thinking, “Finally! At long last!” 

It’s a lot like Tom Hanks on the beach in the movie “Castaway” when he sees an airplane flying overhead. He’s so desperately, depressingly, excited, to even dare think he might be one tiny step closer to being rescued that his emotions overwhelm him, first with the excitement stage, then in the absolute grief stricken stage when he realizes he’s lost, without any hope.

That’s exactly how millions of SBOs feel with the SBA and the EIDL process.

Here are some “painful truths” to help you prepare yourself to better handle your emotions and potential anxiety.

The Background.

Trevor is a 30+ year veteran Mortgage Loan Officer. He has literally “seen it all” and he dealt, almost exclusively, with U.S. Government lending programs. He leverages this experience in two (2) ways for our EIDL Clients. 

First, because he understands Government regulations and processes, he approaches the EIDL application with a different perspective from the average Small Business Owner. It’s more pragmatic, more logical, more process-driven. 

Secondly, given the opportunity to speak directly with an SBA representative, Trevor flashes his credentials like a big city homicide detective in a small town police station after his grandmother smacked her car into a neighbor’s shrubbery. 

He’s polite, respectful, but, because of his experience, and because he presents himself as a colleague and fellow traveler, the SBA representatives, more often than not, communicate with him differently than they would to you. Often, they share insights into the SBA process that would NEVER be revealed to the average SBO.

For instance, yesterday a young SBA Loan Officer made the following two statements upon hearing Trevor’s “I’m a Loan Officer” introductory rap: “I’ll be honest, the guidelines change almost weekly.” And, “I’m not talking out of school, but sometimes, I get quite frustrated with many of my colleagues and the notes they make in the files.

In other words, there’s an entire “behind the scenes” aspect that SBOs simply cannot grasp. And you may not understand how that behavior at this Federal bureaucracy is prohibiting you from getting access to these vital funds.

Important “Painful Truths” to understand.

Painful Truth: Seven days to submit documents.

SBA says you have seven days to submit documents (we’ve seen three days also!). Problem is twofold:

1. Even if you submit the requested documents, say an IRS 4506-T, within three minutes of receiving the request, you’re most likely to hear nothing back from SBA for weeks. Or months

2. We’ve seen SBA indicate this ridiculous rule of “seven days to submit” only to get an email six weeks later, looking for the same documents, whether they were submitted or not. In short, what the SBA “says” about your process must NOT be trusted AT ALL.

Painful truth: multiple IP address log-ins. 

Yes, we’ve discovered that SBA representatives are putting fraud alerts on your EIDL file if you’ve logged in from multiple different IP addresses, whether by emailing the SBA or by visiting the SBA portal. 

That fraud alert is literally stopping your file in its tracks. 

Many SBOs have been working for many months, or even more than a year, to get their EIDL processed. In all that time, out here in the real world, it’s perfectly reasonable that someone might use different computers or devices, or different Wi-Fi networks to interact with the SBA. 

BUT, instead of understanding how the world actually works, the SBA treats these normal activities as fraudulent. Meanwhile, the real criminals have been stealing money from the SBA and the US Government since day one. 

You are getting lumped in with the criminals simply because you used your iPhone to log into the SBA portal on Monday, and then your home computer on Thursday.

Painful truth: SBA representatives either don’t read your complete documents submitted, or, worse, they don’t know their own required forms.

We’ve seen it all in this regard. We’ve used the SBA’s own forms (3501, 3502, 1368) to submit Reconsiderations and Appeals, only to get yet another ridiculous document request, or worse, a declination, because the SBA person working on the file didn’t bother to read the SBA forms we submitted, or didn’t understand them.

The reasons for this behavior are layered, ranging from:

  • lack of time to review the file thoroughly (a true underwrite takes hours, not minutes)
  • lack of training or knowledge, and finally
  • utter incompetence

What can you do about this? Nothing, other than keep plugging away.

Painful Truth: Management Review

Even if your SBA Loan Officer is a Superhero on your file, because of the aforementioned fraud consciousness of SBA, your file must go to a supervisory level to sign off on the Loan Officer’s approval. Not only can this be a “black hole” for your file disappearing, but some of these supervisors are attorneys, not loan officers. So, even if you had a great conversation with your Loan Officer, once the supervisors get your file…well, you understand the painful truth revealed here.

When your EIDL file is declined, you will NEVER in ONE MILLION years be told the truth of why the file was declined.

STOP ASKING WHY. They won’t tell you, or will give you a reason that may or may not be accurate. This is mostly because there are no accurate notes in your file at SBA and also because to answer your question literally requires a FULL UNDERWRITING REVIEW of your file.

The Customer Service rep or Tier 2 Agent cannot give you that level of attention. They cannot. PLEASE STOP ASKING. 

Final Painful Truth: YOU, the EIDL applicant. 

Your emotion and anxiety and failure to take care with your own documentation, gets in the way.  We see this time and time again with our own clients. 

They want to tell “story”, and yet, they submit documents that are inadequate, incorrect, contradictory, and incomplete.

We’ve said this thousands of times: STOP STORY-TELLING.

The SBA reps not only don’t want to hear it, but you’re actually muddying the waters of your loan process. Do you know what it’s like to have to sort through 23 novel-length emails explaining and telling stories? It’s impossible.

We’re advocates for our clients. Can you imagine how the SBA representatives react to this nonsense? You’re literally your own worst enemy with the EIDL process. We know, the truth is painful. 

10 EIDL UPDATES

Visit our Videos on COVID-19 EIDL Updates

Our opinions are our own. For videos on EIDL Updates, visit our YouTube playlist.

1. SBA is definitely working faster on files. We’re seeing recent Reconsiderations getting a response in thirty days or less. The response typically requests additional documents; the response isn’t necessarily an approval.

2. Once documents are submitted. SBA’s typical dysfunction kicks in and there’s silence on the file, no status updates available, NO approvals, and, too often, DECLINATIONS.

3. DECLINATIONS. We’re seeing that SBA fails time and again to actually read documents submitted for the Reconsideration process, including failure to read SBA’s OWN specialized forms (SBA Form 3501 and 3502). Also a failure to thoroughly review tax returns.

4. DECLINATIONS II. There’s a spate of declines over the past several days. Feels like SBA is “clearing the decks” again and sweeping older files over the starboard bow.

5. OLDER Reconsiderations. It’s an absolute disgrace with the lack of activity on these files. When SBA actually works on the file, there are repetitive requests for the same documents, and failure to read the documents submitted and move the file forward.

6. Once a Loan Officer signs off.  When a file is marked for approval based on the loan officer’s review, there’s a secondary review level (including legal team as far as our understanding). This secondary review seems to take weeks and there’s no response or status update in the meantime.

7. Uploading documents to SBA portal.  This is a constant nightmare: documents do not register in the system or are marked as “incorrect” when they aren’t.

8. $2M Increase requests. So far, it’s easy to request; we’ve submitted several.

9. Funding problems. Once a file is approved and the primary “authorized signor” DocuSigns the Loan Agreement, there have been delays in receiving the funds. We solved the mystery yesterday when we discovered the SBA is emailing the Loan Agreements to ALL other owners with a 20% or greater ownership interest, but the emails often go to SPAM and the primary signor is UNAWARE of this because there’s no mention (or functionality) on the SBA portal.

10. INCREASE BACKLOG. SBA has NOT cleared the backlog. We still have dozens of Client increase requests languishing in the SBA system with NO activity since APRIL.

Grab it NOW

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.

The Myth of Running Credit

Credit reports is one of Trevor’s areas of special expertise after a 30 year career in the mortgage industry. 

In his experience, inquiries will impact (the correct word as per the credit bureaus) by 8 points.

Trevor has read thousands of credit reports to witness these results. 

This “myth” of credit inquiries damaging a credit score is decades in the making and is now so firmly baked into urban mythology causing us to respond to concerns, about running credit, hundreds of times.

If someone is LEGITIMATELY running your credit, having inquiries on your credit report is NOT the reason your EIDL loan is declined. READ THAT AGAIN PLEASE.

Please stop wasting valuable energy with unnecessary excuse-making and finger-pointing, and start drafting a coherent, sensible, factual statement to address your credit history.

And please start getting your financial documents in order and address any inconsistencies that could cause SBA to decline your loan. The really good loan officers try to fit your business into the guidelines to accomplish an approval but often, business owners fight the system thinking there is a conspiracy.

Be better than the SBA and own your responsibility to the process and stop worrying about HARD INQUIRIES. I promise you INQUIRIES are never the reason for a declination. It’s too often mistakes made by mistakes in their rush and disregard to tend to the details.

How to Manage Distractions for Your SBA EIDL APPROVAL

Saturday afternoon, Trevor purchased a half gallon of 2% milk for his morning coffee. He then discovered the milk was bad. When he checked the date, he saw the container was already 8 days past its “sell-by” date when he purchased it, thus making today 10 days past due.

He returned to the market, grabbed another 2% half gallon only to discover that the date was also past due. Finally, he found one that’s good for another 8 days.

When Trevor went to the counter to tell the owner, he said, “I knew it. I should always stock the milk myself.  No matter how many times I tell them, they just don’t pay attention.

He was referring to the two young men, probably teenagers, who work part-time for him. We remembered they were there the Saturday when Trevor went to the counter to pay for the first, bad, half gallon of milk. They sat off to the side and neither one had the sense to get up, come to the counter and ring Trevor out. The owner was busy at the ice cream window scooping out some of his excellent local creamery ice cream.  Trevor had to wait to pay for him to finish with his ice cream customer.

When he told Trevor about the lads not ‘paying attention’ to their work, we were reminded of the teenager we hired to split firewood on our property. We told the owner, “When they’re working here, you have to take their phones away.” Trevor went on to describe his observations of the wood-splitter at our house: “His Mom drove him up to our driveway with the wood splitter on a trailer attached to her car.  Then, later, I saw him split two pieces of wood, then take his phone out of his pocket, spend five minutes messaging, then split two pieces of wood, then the phone would come out of the pocket, and so on.

Before you think we’re just old curmudgeons who disregard a teenagers’ work ethic, let’s describe some of the same behaviors we’ve discovered in our clients.

Thanks to COVID-19, our little financing practice morphed into assisting small business owners with the Federal Government’s disaster assistance from the U.S. Small Business Administration (SBA) known as Economic Injury Disaster Loans (EIDL). Working on an SBA loan application is, in the best of times, a daunting and complicated process. 

The paperwork is complicated and lengthy, and the bureaucracy is fraught with all kinds of systemic incompetence.  All of these features have been exponentially made worse by the overwhelming need for this program due to the pandemic.

Our clients run the gamut from “gig-worker” self-employed sole proprietors to owners of businesses that generate multi-millions in annual revenue; age ranges from 20-somethings to folks my age (60) and older.

Trevor was a mortgage loan officer for 30 years. He learned early on that the key to getting any loan application approved was paying attention to details, especially those that may appear to be inconsequential. He worked mostly on government mortgage loans in his career; which presented a solid preparation for working on these SBA government loans now. And the most important lesson, about those otherwise minor details, comes to bear every single day.

Most of our clients have applied for the SBA loan and have been declined. So our job is to review their documents and their applications and “fix” whatever was wrong that caused the declination in the first place. You may think these folks were all declined because they simply didn’t qualify; but that’s not how this program works, almost every applicant is eligible and qualified due to the fact the loan program is only about compensating the business for revenue lost due to the disaster—COVID-19.

We’ve discovered a terrifying aspect of our modern life: it seems everyone, of all ages, every generation, is distracted. Their distractions are causing real difficulty, personally and professionally. In almost every client file we work on, we see mistakes that range from their SBA application process to the mistakes made with their fundamental business documents or information.

Those mistakes, many of them fairly simple and functional, are causing these businesses to be delayed in getting an approved for vital this funding that, quite literally, will keep their business alive during the pandemic and beyond. When we discuss these errors with the clients, the responses too often point to that one disturbing word, again and again: distractions.

“I was in a hurry when I did the original application,” as an explanation why there are wild inaccuracies in their application when compared to their financial or other business documents.

Or, from the business owner who’s original business partner, absent from the business for ten years or more, recently walked into the bank and withdrew nearly $100,000 of the business’ money for himself because his name still appears on the business name and the bank account, even though our client doesn’t consider the man to be a partner at all.  Our client never took the time to visit his attorney and change the paperwork, or remove the partner’s name from the bank account. Why? Distracted with his other job, another business, his family, and, you name it.

That same local market owner had his problems with the SBA process too, notably, his inability to locate an important email from the SBA about his loan that we had submitted for him. We called him every few days to ask if he had received an email from SBA with his loan approval (all our other clients were receiving emails and I couldn’t figure out why he wasn’t). “No, nothing yet,” he’d say, to which we responded, “Did you check your SPAM folder?”

But he’s busy running a little country marketplace (with, apparently, useless employees who can’t even stack milk cartons with correct expiration dates), so it wasn’t until we got him on the phone late one afternoon when we knew the store would be quiet and we forced him to stop what he was doing and scroll through every single email, including SPAM.  And, there it was!  The SBA email from two months before, now long expired, with his loan approval.

Like the milk episode, this caused more work for us. His distractions of simply running his business kept him both from hiring competent employees (who were distracted in their own ways), training those employees, and taking the time necessary to attend to a vital funding that would dramatically have eased his economic suffering due to the COVID-19 pandemic lockdowns.

Trevor realized that he noticed this trend in the late years of his mortgage career, too. Folks who were requesting that Trevor’s bank lend them hundreds of thousands of dollars, were so distracted in their daily lives (they always had the excuse of being busy…and thus distracted.), they couldn’t find the time (or bandwidth) to pay attention enough to basic documents or questions needing to be answered to get their loans approved. This to buy their dream house.

Like the young men at the local market who are too distracted to pay attention to “sell-by” dates on the milk cartons, so many of us are distracted to the point of distress. You’re literally ruining your lives, either personally or professionally, or both, with your failure to recognize and control your distractions. These distractions are not solely the fault of our smartphones. Or even social media.  There are all kinds of static-inducing disruptions to our days.

Trevor, as a student of economics and history, he puts these distractions down to a single phenomenon, one that is (finally) getting more attention in the media. That phenomenon is directly related to money.  More specifically, earning money and the cost of living. We’ve watched this distressing trend grow from the early 1990’s, through the boom times and recession times, and especially after the global recession that resulted in 2010 from the mortgage meltdown.

People have been struggling to “catch up” with costs, and earn a decent basic living for decades; but that struggle received a new infusion of chaotic confusion after the global recession. The rich definitely got richer, none of the bankers or financing titans went to jail or paid any kind of price for causing this worldwide calamity, but the average working person today has paid, and continues to pay, the price for that more than decade old recession.

COVID-19 only exposed the brutal reality of this financial duress in the most blunt terms possible.

But, those of us who have struggled and continue to struggle, we fail to recognize this calamity. Instead, like bugs scattering when you lift a stone up, we simply go about our days, go about our business, go about “living” in a way that seems to us to be satisfactory.

Wake up.  Your distractions are killing you. You need to save your own life and you need to slow yourself down and you need to focus.

Take your pick of the things that are killing you, or will kill you, or your children: Climate change. COVID-19. Politics. Driving fast combined with distracted driving. And on and on.

We have three suggestions, or “rules” on actions you can take to reduce, and hopefully, eliminate, distractions from your life.

Rules to not be distracted:

  1. Take Care
  2. One At A Time
  3. There’s Plenty of Time

Take Care

We use this rule with our financing practice. Think of the old carpenter’s adage: “Measure twice, cut once.” That’s essentially what “Take Care” means. Whatever activity you’re undertaking, whether you’re stocking the milk cartons, preparing financial documents for your business or to buy a home, making decisions that could affect your or your children’s well-being, take the appropriate care with that process. Look at the solutions, the consequences, the pro’s and the con’s; look at the mechanism, about what it will take to accomplish whatever it is you’re doing or deciding on. Then, put all that good brain-power you just expended to work.

One At A Time

We refuse to waste time arguing, or reading about, whether or not multi-tasking is a good or bad thing. We prefer to think from the positive perspective: doing ONE thing, allocating time and energy to that one thing, and accomplishing that ONE thing, is a worthy enterprise. It works. Time and time and time again: when you’re focused on ONE thing, from spending time speaking to an elderly parent, or preparing your documents for your tax returns, or whatever task or mission you need to accomplish, large or small, when you do only the ONE thing at one time, not multiple things at the same time, your results are so much more gratifying and accurate.

This also saves time from having to go back and redo something again.

There’s Plenty of Time

We’re convinced that somehow we all have come to believe that time is running away before our very eyes and that if we don’t hurry up, we’ll miss out on something.

There’s this trend, apparently, among the younger folk, to take time for getting the most out of their young lives now. That’s why they don’t want to be trapped in jobs that are mind-sucking-soulless-energy-sapping endeavors to earn money and nothing more. A good meal with friends; rock-climbing; doing nothing for its own sake. These activities sound more like retirement, but in reverse because the people doing them are all young. It’s as if they believe they’ll run out of time.

We posit this concept: when you’re young is actually the BEST time to invest in yourself for your future, whether that’s education or earning, or any combination of the two.  Further, spend your time wisely. The time’s not running out; but YOUR time to create something good for yourself in your life is running out, because economics will catch up to you with bills you’ll have to pay, families you’ll have to clothe, house and feed, and energy that wanes as your years progress.

Embrace your life by all means; live for your moment. But do it in a way that is well-considered. Take into account that, short as all our lives are relative to the Universe at large, there’s actually plenty of time.

Distracted while writing this: We confess that, as we wrote this, we were distracted a few times. Maybe that’s part of the writing process, taking time to think, although some of the best writers in the world say you should lock yourself in a room alone with no distractions and do nothing but write. Hemingway started every one of his days that way: with no distractions and focused on his writing and we all know how that turned out for him.

We don’t believe we allow ourselves to be distracted in the ways that we see so many other people churning through their lives.  And, we can honestly say this: we have accomplished some fairly incredible things in our lives by following these three aforementioned rules. Focusing and refusing to be distracted.

We hope our little discourse didn’t distract you too much.

Break It Down

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.

Advice from Trevor the Loan Officer: Obey The Speed Limit!

Working on EIDL Reconsideration files for more than a year, we’ve learned the many reasons that loans have been declined and why many Small Business owners are continuing to have tremendous difficulty with the SBA EIDL process. Simply, it’s mistakes folks make when completing their EIDL original applications.

Trevor, a 30 year veteran loan officer learned long ago to take his time when completing a loan application. He also learned long ago to triple check information, cross-verify documents and account numbers, and generally, obey the speed limit.

As a result, his loan applications have a higher rate of approval, including the many EIDL applications he’s submitted since last year.

The following two examples support our theory that Small Business owners are rushing and making mistakes.   Completing your application (or any other documents you submit to SBA) isn’t going to get you the money faster than the time you take to slow down to complete the EIDL application so that it’s accurate the first time. On average, Trevor spends approximately two hours to complete an application for each one of our clients.

Here are the actual mistakes…one of dozens and dozens:

“I put an incorrect phone number on my application because I sped through it.”
“In my rush…I put the bank account number (in place) of the EIN.”

Please slow down, pay attention and review and double-check the information you are providing to the SBA. They will not contact you to verify, they simply decline.

For information about Natural Disaster EIDL vs. the COVID-19 EIDL, please visit this page for information about that distinctly different process.

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.

Blue Button Strategies

Here’s our recommended strategies while you are waiting for the infamous “BLUE BUTTON” to become functional on the SBA portal for your EIDL Increase request:

Manage your anxiety. Schedule TWICE daily check-ins, once in the morning, the second in the evening.  The money’s not going anywhere, it’s not running out, and you’re not going to miss a “place in line” with millions of other EIDL applicants if you don’t submit your request within a few hours.  You can wait the day. Doing so will reduce your stress.  When you feel yourself getting stressed about not checking the BLUE BUTTON every three minutes, do the following mundane, boring, functional stuff instead:

PREPARE.  We’ve seen SBA coming back recently and requesting additional documents for the EIDL Increase requests.  YES, it’s true, we’ve seen some requests were automatically approved.  That’s the BEST CASE, obviously. Don’t assume the “BEST CASE” scenario; assume the worst case and PREPARE for the SBA request.  Here’s a list of documents we’ve seen SBA requesting to approve the EIDL Increase.  One important note: don’t assume SBA already has your documents from the list below. If they ask for it, submit it again, in an updated form (current date for your signature instead of a date from two months ago, for example).

LIST:

  • 2018 and 2019 COMPLETE Federal tax returns
  • Driver’s License: COLOR legible PDF scan front and back. If the image is blurry, do it again until it is CRYSTAL CLEAR
  • VOIDED check for the destination bank account to deposit your funds. BE SURE this is the SAME account you entered on your original EIDL application. BE SURE you don’t reverse the ROUTING number for the ACCOUNT number. Yes, we’ve seen people do that!
  • SBA Form 2202. THIS is IMPORTANT.  Have a form that is current because SBA wants to confirm if you have incurred any other debt in the name of the business entity since you applied, including existing EIDL and PPP loans or other types of financing. Remember: ONLY business debt in the name of an business entity; personal debt does not go on this form. EIDL and PPP go on the form no matter whether you are an entity or a Sole Proprietor.
  • Business Plan and Revenue Projections for 2021.  See our BLOG post about how to prepare.

Here’s what we’ve experienced at Aurora Consulting in our two plus years of assisting Small Business Owners to obtain financing, including the EIDL COVID-19 loans and PPP loans:

  1. Small Business Owners don’t want to be bothered with the basic building blocks that are boring
  2. They don’t want to take the boring time to write boring business plans
  3. They don’t want to take on the mundane task of doing some basic fifth grade math to calculate income and expenses
  4. They don’t want to bore themselves to tears by spending time organizing basic documents into a neat and orderly and presentable fashion

Maybe YOU are NOT in this bucket. GOOD.

Much of what we do at Aurora Consulting is to shepherd our clients through these basic and boring tasks.  Here’s the problem: BORING leads to financing success.

Eliminate your stress about the BLUE BUTTON by BORING yourself.  It’s much simpler than you think.

Planning and Projections for Your EIDL Loan

The request for a business plan can pop up at any time. We saw this before and during COVID. 
SBA was asking many EIDL applicants for Business Plans and Revenue Projections. Frankly, this is something you should have AT ALL TIMES if you consider yourself a Small Business Owner, even if you’re a “gig economy” Schedule-C Sole Proprietor. You can’t truly measure your success without a plan.

When Trevor was a 100% commissioned Loan Officer at a Mortgage Banking company, he had a 22 page Business Plan with Revenue Projections, and he was an EMPLOYEE.

We put together a list of questions for our clients so we can prepare the necessary information for their SBA EIDL applications.

We’ve developed questions to assist in preparing a 2021 Business Plan Summary and Revenue Projection:
SBA recently is asking many EIDL applicants for Business Plans and Revenue Projections. Frankly, this is something you should have AT ALL TIMES if you consider yourself a Small Business Owner, even if you’re a “gig economy” Schedule-C Sole Proprietor. You can’t truly measure your success without a plan.

When Trevor was a 100% commissioned Loan Officer at a Mortgage Banking company, he had a 22 page Business Plan with Revenue Projections, and he was an EMPLOYEE.

We put together a list of questions for our clients so we can prepare the necessary information for their SBA EIDL applications.

We are happy to share it with you here. Wishing you all SUCCESS in everything you DO!

We’ve developed questions to assist in preparing a 2021 Business Plan Summary and Revenue Projection:

QUESTIONS

  • What actions did you take in MARCH 2020 to adjust or “pivot” your business to survive the COVID-19 pandemic?
  • How did those actions help: have you maintained a steady flow of business, did your business decline?
  • Are you continuing those actions into 2021?
  • Have you originated new business concepts to continue your business productivity into 2021?
  • If yes, what are these new concepts?
  • How will the EIDL program assist you to maintain the continuity of your business?
  • How will the EIDL program assist you to support the “pivot” concepts you’ve created?
  • IF you never created any “pivot” concepts, would the EIDL program assist you/encourage you to do that? How?

REVENUE

  • What is the percentage decline in 2020 to your Gross Revenue from 2019?
  • What is the percentage decline in 2020 to your NET INCOME from 2019?
  • If your net income is lower, is that due to the pandemic? If so, how?
  • Without EIDL assistance, what do you anticipate to be your Gross Revenue in 2021 for EACH QUARTER?
  • With EIDL assistance, what do you project to be your Gross Revenue in 2021 for EACH QUARTER?
  • Will you incur new, different expenses in 2021 than you’ve had in 2019?
  • If so, what specific expenses and how much in dollars?

If you want more information about untangling how a business plan works, especially for financing purposes, click below for our business plan outline guide.

If any of our videos or blogs have been helpful, useful and productive, please leave us a positive review on our GOOGLE PAGE. It helps other business owners seeking vital SBA information for their business, not to mention, it’s a kind exchange of information.

Ambiguity and Uncertainty

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.

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.

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.

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.