The Problem with Crowdsourced Knowledge

We believe crowdsourced knowledge can be useful for two reasons ONLY.

    1. Ascertaining general knowledge on a topic with which you’re unfamiliar.  An example is changing a tire on a car.  If you’ve never changed a tire on a car and you either ignore the instruction manual in the glove compartment or don’t have one (you can download it online in most cases), then crowd-sourcing other people’s experiences with changing tires can be useful to the extent that you’ll learn special tips or come to understand the general concepts: jack, bolts, tire pressure, etc.
    2. Obtaining referrals to experts.  After learning of other people’s experiences with changing a tire, you may decide there’s too much at stake—such as the car falling off the jack. For this reason, you may decide to not undertake the job yourself.  You seek out advice from expert providers of tire-changing services.

Both of these concepts are valuable, but should only be used as a starting point if you have absolutely no knowledge or experience of the task or information you’re researching.  Or, if the task is complicated and requires true expert knowledge of the subtleties and nuance of the information.

The starting point of using crowdsourced knowledge can become a “fork in the road” to move forward with the activity you’ve been researching.

You can choose to take the knowledge and seek out an instruction manual for the car you wish to change the tire on.  You can then do the work yourself, guided by the instructions created by an expert—in our example, the vehicle manufacturer.

Or you can choose to conduct additional research on the experts you’ve seen recommended:

    1. You might look up each expert’s online reviews through other platforms.
    2. You might seek out the expert’s professional credentials through government regulatory authorities or check out the professional biography of the expert.
    3. You might ask your trusted circle of friends, family and colleagues if they have used any of the recommended experts to obtain further information and enhance your research.

Using these additional activities, the crowdsourced research can lead you to find a high-quality expert in the area you’re researching.

But there’s a small alleyway off the side of the road where the “fork” in the road lies. We call that “shortcut alley” because too many people don’t want to take on the extra work necessary to find the best results for the information they seek.  Instead, they want the shortest way to solve their problem. 

They’ll take the crowdsourced information they’ve obtained at face value as the be-all and end-all of expertise.

They fail to use the crowdsourced knowledge solely as a starting point, and then do the extra work necessary to gather data and inform the ultimate decision with comprehensive research.

In our opinion, this is a disaster in the making more often than not.  Yes, the crowdsourced information can often be very useful, such as learning to add a dollop of butter to your oatmeal at breakfast.  But when it comes to more complicated topics, the crowdsourced expertise is anything but expert.

We learned this through the pandemic as we sought to provide free expert information to small business owners trying to navigate the United States Small Business Administration’s COVID-19 disaster loan program.  Often, we’d encounter business owners telling us that our information was wrong. They would challenge us with the information they’d crowdsourced.  Our pushback was to say that the experience of one person was unique to that person and that the loan program was too complicated to rely on the one experience of one business owner with their particular scenario.

We continue to encounter these crowdsourced-fake experts as many small businesses fail or continue to face challenges repaying these COVID-19 disaster loans.  The crowdsourced-fake experts would have people believe they can simply walk away from the loan, to either ignore the consequences or, worse, to go about their days thinking, “The government will never come after me.”

Because we rail against this terrible advice, we’re sometimes accused of being fear-mongers so we can sell our products and services.

While it’s true that we’re a small business and we have products to sell and services for hire to earn a living, we also give away volumes of free expert advice through our YouTube videos, free downloadable guides, and responses to video comments. Our expertise is derived from our respective careers in the financial services field, from the work we did during the pandemic, and from the ongoing work we do to assist small business owners with their interactions with the SBA post-pandemic.

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In today’s New York Times, an article about a basketball player’s dream of owning a home in Canada provides probably the most succinct insight into the reasons why simply “crowdsourcing” your expert knowledge is a failed concept if you don’t do the additional work. This is a tale of the worst aspects of bad crowdsourced experience, and the shortcut mentality that led to a financial disaster.

In the article, the basketball player must vacate the house he purchased because nefarious characters continually show up at the house looking for the previous occupant.  The previous occupant is a person named Aiden Pleterski, a self-styled “crypto king” who declared bankruptcy in 2022, while owing 26.8 million Canadian dollars to more than 150 investment clients.

He’s under investigation for the massive financial fraud involving monies that he is alleged to have stolen from investors.

Pleterski had no professional or educational experience or expertise. In this quote from the article, you can see where Pleterski learned how to become a financial whiz: “Mr. Pleterski said he first became interested in cryptocurrency after using it to make purchases for video games and began trading it when he was still in high school. He started out with money from his family and his earnings as a part-time baseball umpire. His knowledge of trading and financial markets, he said, came from “YouTube videos, Google, quick Google searches.”

“The business, Mr. Pleterski said, operated through his personal bank accounts until December 2021, when he set up his company at the suggestion of a former landlord. His only record-keeping, he said, consisted of his texts and WhatsApp messages with customers. While Mr. Pleterski did create spreadsheets for a handful of customers who demanded them, he acknowledged that the investment return they showed was just “a general ballpark figure” he came up with after looking at his bank accounts.”

We understand that the nuances of some activities, such as interacting with a complicated program such as the SBA’s COVID-19 loan program can make the search for expert knowledge more challenging.  But we’ve too often heard from people—as recently as yesterday, in fact—how they wish they’d found us sooner.

The small business owners we spoke to yesterday are not “shortcut” people by any stretch of the imagination. They had a question during the pandemic about how to properly use the funds their business received from the COVID-19 EIDL program. They sought out expert advice and received a referral to an expert.  But that professional ultimately gave them bad advice, so bad in fact, their business might be in legal jeopardy should the US Government investigate the use of the funds and then discover the improper utilization.

Based on our conversation, we know these business owners were so desperate to get an answer to their question, that they failed to go to the next step of taking their crowdsourced referral to investigate further the background of the expert. They did not read online reviews of that expert’s professional services or acumen.  They did not research the expert’s professional credentials or professional biography.  They simply accepted the crowdsourced recommendation, contacted the expert, and followed his bad advice.

Too often the desperation to resolve a problem quickly can lead to taking shortcuts.

When it comes to your COVID-19 EIDL, there are no shortcuts. The program is complicated and there are substantial real consequences to making bad choices and bad decisions. Whether you need to make a simple change to your business or if you’re facing challenges in repaying the loan, take the time to thoroughly research and locate the expertise you need to make the best decisions possible.

If you don’t invest the time to thoroughly research, if you take a “shortcut” and accept the crowdsourced knowledge as the ultimate expertise, you may discover the car falling on top of you as you try to change the tire with the badly sourced fake expert advice.  

And it’s going to hurt. A lot.

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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.

Tax Refund vs. Eligible Income

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!

Four Metrics to Monitor for Profit

To monitor your bottom line profit you need to put some fundamentals in place.  Once those foundational elements are implemented, you next need to create a monitoring schedule to check in on your profits.

Again, we’re not suggesting anything that is revolutionary in the world of running a business.  But we’re presenting these suggestions based on our real world conversations with business owners as we interview them to begin searching for credit financing solutions for their businesses.

In other words, as obvious as this advice might seem, we’ve encountered many business owners who don’t have these fundamentals in place for their business. If they do have these building blocks established, we discover their systems for implementing and monitoring are only one step removed from “back of the envelope” calculations.

We want you to do incredibly well with your business!  We’re presenting this obvious advice to help you organize these basics in a way that you can almost say to yourself, “Set it and forget it!” This leaves the system in place and removes so much anxiety and impatience from the day to day operations of your business so you can dig in to the two things that count most: loving what you do and building your business to even bigger scale!

The 4 fundamentals to measure profitability.

Timeline.  What is the sales/production cycle for your business?  Create a realistic expectation of when the cash hits your bottom line by reviewing your past three years performance.  Look at your previous cycles.  Calculate the turn times on when you delivered your product/service, and when you realized the cash injection to your bottom line.

Production Costs. While your production timeline might be, for example, three weeks, you must ask yourself if any production costs linger after the production cycle.  Are there delayed payroll expenses?  Are there residual expenses for cost of deliveries (freight costs, internet marketing costs, re-tooling expenses for next production run, Accounts payables to outside vendors necessary for the production cycle)?

Receivables.  Review your Accounts Receivables aging reports for the past three years. What is the true timeline when you receive better than 90% of the cash income from your receivables after you’ve sold your product or service?

Delays.  With each of the above three fundamental criteria, add a percentage variable to account for delays. What happens if there’s a slowdown in your ability to deliver your product/service? Add that into your calculation. Same for cost overruns that could lead to extended time periods of production costs

(What if your current freight delivery provider can’t manage the extra volume of a large order and you need to bring in another provider? What if you needed to add three more freelancers to complete video/content/production or implement design elements?) 

Same with your receivables. Assume the worst for your slower paying receivables and add delayed payments to your calculations.

Time To Check Your Profits.

Once you implement the above four fundamental monitoring elements, now create a schedule to check in on your profits.  Get it in your calendar!  Lock the door!  Give yourself (and your management team) time to focus solely on this aspect of your business.  No interruptions, and answer the question: where do we stand with profit?  If you’re profitable, what’s your bottom line number and does that match your expectations from your Business Plan?

Throw in the additional calculation: margin. Compare profit to expense. On a per product/service delivery price, what is the exact percentage in your profit column?

In the final analysis, literally, you’ll have a clear understanding of your profit.  When you comprehend in clear terms how you derive profit for your business you can then think about how to improve profit.  You may find yourself discovering new opportunities for profit centers and thus new products/services.

You may be pleasantly surprised that you’re more profitable than you thought you were.  Then you can decide what to do with that extra income, to plow it back into the business, to create cash reserves, maybe make bonus payouts to ownership, make charitable contributions, or take a vacation!

Again, what we’ve found is that many business owners lack a clear picture of their profitability in terms of hard numbers, metrics that you can see on your computer screen.

These fundamental systems may seem daunting in terms of the investment of time and money to implement, but, like any other feature of your business, once you’ve put them in place, not only will they help you with clarity of your profitability, but you’ll only need to tweak these existing systems in years to come as you grow your business by leaps and bounds!

3 Metrics to Watch

We find business credit financing solutions for business owners.  We also find that many business owners hold anxious trepidations about the concept of borrowing money.

Yet, the need does arise for working capital to continue to grow your business success story.

Whether the working capital need is unexpected–due to an unusually large order from a customer, a seasonal downturn in revenues, or a sudden opportunity for growth such as purchasing a competitor–or a planned requirement such as equipment purchase or investing in a new marketing plan, your business will need capital to grow.  Unless your profit margins or cashflow planning have created a massive pile of cash for just such a capital expenditure, you’ll need to go outside your company to find that money.

The alternate choice to credit financing is to bring in capital from other equity sources.

Refinance your personal home or leverage your retirement accounts and bring in the required capital.  Sell off valuable equipment, ideas, collectibles.  Bring in an equity partner.   We’ve pontificated at length about the last option…do you really want a partner who may wind up telling you “how to make the pizza?“

There are many reasons why choosing equity sources for capital infusions are bad for you personally and professionally.

Yet, too often this is the path chosen: equity sources.   Business owners go down this path for several reasons: time-constraints to obtain the capital; anxiety around the idea of borrowing.

Credit financing to obtain working capital doesn’t have to frighten the heck out of you.  At Aurora Consulting, we understand the worries that come along with borrowing money: “What if there’s a downturn in my business and I cannot repay this loan?”

Especially after the global meltdown and subsequent recession of a dozen years ago, lingering fears and doubts remain laced through our economy and our economic thinking like clogged drainpipes during a sudden torrential downpour.  The water has to move, and move quickly, but the remnants of various and miscellaneous flotsam and jetsam are jamming up the pipes and the rainwater backs up causing all kinds of other problems.

The same is true of these lingering doubts about borrowing money.  Credit can be a good thing and nothing to be fearful of when approached sensibly and when the credit terms are incorporated into your business planning.

Still, these worries hang on.

We’ve come up with the concept of 3 important business metrics you can keep an eye on after you’ve borrowed that needed working capital.

Remaining vigilant on these metrics can help you avoid a sudden negative revenue issue which could lead to default on credit obligations.  While it may seem obvious to you that these are the metrics ANY business should constantly monitor for maintaining profitability and continuing growth, as with all advice and observations we provide from Aurora Consulting, our real-world experiences demonstrate these ideas are not so obvious to every business owner.

What is obvious is worry and anxiety.  Thus, our presentation of these not-so-revolutionary-ideas.

  1. Profit margins: pricing and expenses
  2. ROI: products/marketing plans/infrastructure/product development
  3. Customer Retention/Construction

Monitor these important metrics by maintaining your financial reporting to the most current and efficient methods.   We often see businesses with financial statements such as P&Ls and cashflow statements that are not up to date.

A balance sheet isn’t just for your CPA to use when you’re filing your tax return!

And the ever important marketing and business plans?  Wow, we are constantly shocked when we request these vital documents from our clients to include in a financing request package only to be told they don’t have one!

Creating and maintaining these financial reporting documents is incredibly easy with the sophisticated computer applications available, even for your smartphone!

Making the time to check  in with them is another thing altogether.  We sometimes feel as if our clients present us with financial statements and they haven’t reviewed them, recently, or ever.

That’s why we suggest you at the very least monitor these three important metrics on a constant and vigilant basis. WHY?

First, it’s good for the overall health of your business.
Second, you will find you can anticipate challenges and successes before they arise.
Third, you can plan for those challenges and successes well in advance and avoid nasty surprises and cashflow chokeholds.

Finally, and best of all, you can lower or maybe even eliminate altogether your anxiety and fears of credit financing capital to grow your business.

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.

We Anticipate Problems to Create Solutions

Our Process Anticipates Problems, Creates Solutions

The good news is that Banks are lending again on a limited basis for non-disaster loan requests.  The bad news is that the loan products are limited and the underwriting guidelines are very, very restrictive.

Many industries/businesses are excluded from loan programs.  Banks simply cannot determine yet the viability of the businesses to survive the pandemic. Risk is too high and thus doors to the lending vault are tightly shut.

Today we spoke to a Bank on four different loan scenarios. Each of these businesses has challenges on their loan applications of different sorts, whether it’s credit, cashflow, type of business, COVID-19 impact on the ability of the business to earn income.

In the hour-long conference call with the Bank, thanks to our qualification process here at Aurora Consulting, we easily addressed the Bank’s concerns and answered their (often) difficult questions as they assessed the risk on each loan scenario. In three out of the four scenarios, we received positive feedback of interest from the Bank. While this interest does not guarantee a loan approval, this, in our experience is a giant hurdle we overcame. 

The rest of it is the loan process.

We also spoke today with a prospective new client in a follow up to our initial call last week.  This client seeks over $4Million in funding for a unique business, a business for which many Banks and Lenders do not provide funding due to their lack of understanding of how this business operates.

We had already identified a Lender for this financing request.

In our follow up call today, the prospective client indicated they would soon make a final decision on moving forward with Aurora Consulting to secure the financing. They also indicated they were working on their credit.

STOP. RIGHT. THERE….BEFORE we go any further. (Meatloaf medley playing).

A client should not “work on their credit” without proper guidance. Luckily, we provide that kind of guidance here at Aurora Consulting. While we don’t believe in credit repair/restoration, we do have decades of expertise with credit and we also know the appetite of commercial lenders when it comes to credit. Note: We have not yet seen this person’s credit.

Our process at Aurora Consulting includes running a credit report as soon as we sign a consulting agreement with a new client. We do this so that we can anticipate any issues that could slow down or prohibit the lending process. We do this upfront so that we can provide advice that leads to a positive result for our clients.

The same holds true for our entire process. We review all financial statements, business plans, marketing plans and any other pertinent items in the early days of working with a new client.  

We do this to anticipate and resolve problems a Bank or Lender may have in the future.

When you apply directly to a Bank/Lender for commercial financing, these items, credit reports, financial statements and the like, are not seriously reviewed until the very late stages of the loan application process. By then the applicant has spent time collecting and submitting documents and spent money on application fees, appraisal fees and other associated costs.

Literally most Banks/Lenders do not run a credit report until the very final stage of the application process, weeks or months after the initial application. At that point, if a credit issue arises on the credit report, all those weeks and months of work are quite literally flushed down the toilet and the loan is declined.

Our role as your financing Broker is to review all relevant documents, including a credit report, in the early stages of your request, before the application, before we’ve even considered conversing, in depth, with a Bank/Lender.

That’s why today, we hit the mark with 3 out 4 of our loan scenarios getting the green light from a Bank to move forward to the application process.  

We were prepared for every question and concern the Bank had because we’d reviewed credit and documents. We anticipated problems in advance and could converse honestly with the Bank on possible workarounds for those problems.

It’s what we do, because we are the business-owner’s advocate. We work for the business-owner. We would be remiss if we didn’t share with you that banks call us when they can’t underwrite the loan. So we understand their process.

Ask us any questions when it comes to business loans. If you want your business to survive, and THRIVE despite the worst crisis we’ve seen in our lifetime, please call us with your questions.

Email Curious@AuroraConsulting.biz

Proposed vs Passed Legislation

We’re often very blunt about things, especially Trevor as he is Scottish.  “Right between the eyes” is a favorite expression of his.  We don’t like to dance around the truth and we certainly despise getting someone’s hopes up about something that’s not reality.

These principles served both Linda Rey and Trevor very well during their respective careers in Insurance and Banking.

At Aurora Consulting, we embrace and continue to follow those principles to assist our business financing clients.

We’re going to give it to you now right between the eyes: We refuse to discuss proposed legislation about COVID-related stimulus and disaster financing until and at such time as, that legislation has passed the House of Representatives, the US Senate, and has been signed into law by the President. Period.

Passed gets our attention; proposed stays on our “pay no mind” list.

We relied on this attitude in the early days of the pandemic lockdowns when so much was complete chaos, speculation, despair and distress.  We fielded calls, texts, and emails from our friends, colleagues and clients, each of them despairing for any kind of positive news about Government assistance to help them survive the pandemic lockdown, whether about the EIDL program or the proposed CARES Act and the Paycheck Protection Program.

In every instance, we patiently listened to and carefully counselled folks.  We emphasized the word “patience” time and again and coined our phrase for the pandemic, “Ever-Evolving.”

Based on our guiding principles, we waited for concrete information.  The SBA website provided skimpy information at best for the Economic Injury Disaster Loan (EIDL) program.  We charged forward and submitted applications, spoke to several trusted and experienced colleagues, and submitted our clients’ applications, utilizing our decades’ of experience completing successful applications for loans and insurance.

We pivoted with each new challenge that came up, apprised our clients of the situation, and continued hammering at the wall until we achieved positive results.

We used the same methods for the Paycheck Protection Program (PPP). We opted to wait to submit applications until there was more cogent guidance from Lenders and SBA on the functionality of the program.  When we finally submitted our clients’ applications we achieved positive results again.

There’s a lot of talk on the internet, especially on YouTube with glamourous videos, purporting to provide definitive knowledge of what’s in store for extended stimulus and disaster financing legislation.  We call that “static.” PLEASE subscribe to our channel for updates especially for our WTF Wednesday videos.

At Aurora Consulting, we seek results based on reality.  We don’t search for self-inflation of our professional egos by providing incomplete or inaccurate information to the general public at large or our clients in particular.

We know you’re impatient and desperate to hear there is more assistance on the way.  We know that we will wait until that proposed legislation becomes passed legislation.  Only then will we dive into the details to find results-based financing solutions for our clients.

Tough Questions from Lenders

The good news is that Banks and Lenders are opening up their coffers to provide business credit financing. The other news, that’s more anticipated than “bad,” is these Banks want business owners to answer some tough questions about preparedness for further pandemic-related challenges.

If you are applying for business financing—a loan or line of credit—that’s not Disaster Relief-related, here’s a sample from one of our Bankers on what to expect:

  • How has your business been impacted throughout the crisis?
  • How have you and your employees been affected? Your suppliers? Your customers?
  • What are your key priorities over the next 30/60/90 days?
  • How do you anticipate accomplishing these goals? What hurdles do you anticipate?

To achieve a successful response to your application, you should answer these questions with all appropriate gravitas and extreme detail.

  • The Bank wants to know that, should the pandemic-related lockdowns get tighter:
  • How have you planned to get through that?
  • Do you have cash reserves?
  • An employee-furlough action plan?
  • Do you have the ability to provide your services or products with a serious downturn in customer traffic (think early days of lockdown)?

Banks make loan decisions by assessing the risk on the credit profile of the Borrower. As with any aspect of a loan application, the COVID-19 pandemic has created another layer of risk for Banks. Your successful loan application will take that risk assessment into account as you prepare your application for submission by anticipating how to make a Bank/Lender get into a “comfort zone” about your ability to make payments on the loan as other challenges from the pandemic arise.

Download our documents checklist so you’re properly prepared. You have to be better than the lender because they’re trained to say “NO THANK YOU”.

Subscribe to our Financing Fodder playlist on Youtube.

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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.