Aurora Consulting | Commercial Financing Brokers

Being Delinquent Even With HAP Approval

lrey — Fri, 16 Aug 2024 23:21:11 +0000

Trevor did a YouTube video about the SBA’s Hardship Accommodation Program (HAP) for the SBA COVID-19 EIDL program. The HAP provides a Borrower with substantially reduced payments in six-month increments, up to a total of two years.

In the video, Trevor mentions how we at Aurora Consulting are carefully monitoring the SBA to learn how it will treat EIDLs that were previously delinquent in payments but are now showing as “current” in the MySBA profile, even though the Borrower never made a lump sum payment to bring the loan current.

No, the SBA approved the HAP reduced payments program without requiring that the loan be brought fully current.

Clearly, there’s something to be concerned about here. Trevor’s 30+ years of experience in the lending arena inform his serious concern about small businesses with previously delinquent EIDLs and what the SBA is going to do about it.

- Will they send these loans to a private collection agency? The SBA recently stated in a letter to Congress that it’s seriously considering this strategy.

- Will SBA offer Borrowers an accelerated repayment option to help bring the loan current? Trevor indicates this is what a Lender calls “remediation program” that helps delinquent Borrowers come current with their debts without suffering the dire consequences of overall default and collection activity.

A smart viewer of Trevor’s video responded. It was clear Trevor’s message was somewhat obscured about his viewpoint on the default status of a previously delinquent loan. Maybe because he was outside and it was about to thunder down a serious storm! Obscured by clouds, indeed!

Trevor recorded a new video to discuss this topic better. He’ll discuss this again on our YouTube LIVE Q&A on Wednesday, September 4th, 2024, at 8PM Eastern/5PM Pacific. Here is Trevor’s response to the awesome small business owner email:

Thank you for your awesome insight from our YouTube video. I should have been more specific. I realize that now, and YOU helped me to understand that!

When I mention the “default” status, I mean that I believe that internally at SBA they still consider ALL these loans with delinquent payments to be part of what we call in the lending industry “non-performing.”

By definition, a lender categorizes any loan as “non-performing” the moment there is a single late payment. In other words the lender approaches how it manages loans in this category in a different manner than “performing” loans with no late payments.

Therefore, even though a loan like yours might display a status on the MySBA portal as “Disbursed Current” my opinion, based on various statements SBA has made in the past 12 months, is that SBA dropped your loan–and others like it–into the “non-performing” category.

Lenders, including the SBA in this instance, don’t like to carry non-performing loans on their books. It’s too much trouble for the lender: too costly to manage the repayment process in dollars and time. And there is a high probability that a previously delinquent loan, though now “current” might again fall into delinquency in the future. The statistics support such an analysis. Therefore, Lenders often make the decision to discard non-performing loans by selling them off to private collection agencies.

We’ve already seen that SBA did this with 860,000 loans at the end of last year and beginning of this year when they shipped off those loans (not sure if yours was one of them) to US Treasury “Offset Program” department to commence collection activity. US Treasury automatically added a 30% penalty to the loan balance, demanded immediate repayment of the full balance (plus penalty), garnished government payments to EIDL Borrowers, and offered onerous repayment terms.

I believe that US Treasury was overwhelmed with the sheer volume of loans and communications from desperate business owners. I believe SBA took over management of the Offset Program back at SBA due to governmental protest from US Treasury. (SBA commented to various external sources how they were taking over the Offset Program to collect payments)

Thus, it is a logical conclusion for me, as a 30-year veteran of the mortgage lending industry with a specialty in government loans, and now 4 and half years as an SBA EIDL expert, that SBA still considers ANY loan that was delinquent to be “non-performing” and thus subject to further collection action at SBA’s discretion.

And THEN, there is the additional issue of the original delinquency!

If a COVID-19 EIDL was delinquent and is now in a specialized program of reduced payments (Hardship Accommodation Program or HAP), what about the dollar value of those previously delinquent payments?

When does the loan come current?

Can the Borrower eventually pony up the cash to bring a loan current? (In our conversations with over 100 of our Clients, the answer is mostly “No!”)

A reduced payment program not only fails to bring the principal loan balance current, but also adds additional accrued interest to the back-end of the loan in the form of a “balloon payment.” (We discuss this in length in our SBA COVID-19 EIDL Guidebook, along with personal guarantees and SBA liens against business assets)

Please tune in to our Live Q&A on Wednesday September 4th at 8pm Eastern/5pm Pacific and THANK YOU again for your valuable feedback!

Subject – Re: EIDL accommodation delinquency short

(Redacted email)

On Aug 15, 2024, at 9:18 AM, Nancy wrote:

Hi!

Your short had a question about how delinquency is treated in hardship accommodations. I just recently did one under 200k. First, it shows up with the new payment amount and as a delinquency. Quite disconcerting if you don’t know it takes 48 hours for the system to bring you current! Then it updates to current after 2 days. The SBA agents will verify on the phone that this is how it works.

Best,

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Will SBA Sell Their SBA COVID-19 EIDL Portfolio

lrey — Fri, 07 Jun 2024 22:50:30 +0000

This blog complements our YouTube video, where we analyzed an INC.com Article.

We scrutinized several sections in the article, The SBA Will Keep Its Covid Loan Portfolio to Avoid Taking a $120 Billion Haircut by bringing a unique perspective thanks to our 30-year-plus loan officer who specialized in government loans, has worked on several hundred EIDL files, has had thousands of interactions with business owners and SBA reps on EIDL files, transactions, business changes, etc.

Thank you, Inc.com, for writing this article. Previously, the only media attention on this U.S. Treasury debacle, which has been going on for several months, was an article in the Wall Street Journal.

We think Inc.com did a credible job discussing these elements, giving us an opportunity to illuminate them point-by-point and provide more depth so that you can understand the program.

Why We Spoke Up About This Article

We started working on COVID-19 EIDL applications in March and April 2020. We helped our clients get an estimated $70 million in approved loans.

We estimate that, with the free videos on our YouTube channel and various blogs on our website, including how-to instructional videos and live Q&A sessions, we helped small business owners get approved for another $30 million on their own.

The Implications of this Article

Inc.com specifically addressed the COVID-19 EIDL program and how, under tremendous political pressure from certain politicians in Washington, D.C., the SBA was going to take a huge tranche of the COVID-19 EIDL portfolio and sell to private collection agencies. We’ll address why that’s bad for business owners.

The other element of our conversation about the article, based on our expertise and day-to-day interactions with SBA, is that we have a different understanding of the statements made in this article. We’ve outlined those statements to give insight to help you arrive at an action plan that you will want to implement. It has to do with you and the political representatives who represent you.

Consequences for Business Owners

If you have recently suffered the terrific trauma of having your COVID-19 EIDL shipped off to the Treasury for collection by the SBA due to their systemic failures under the program, you want to review this blog and watch our video.

If you haven’t yet entered repayment because your 30-month deferment period hasn’t ended yet, you want to be aware of what’s going on behind the scenes to help you make decisions about how you’ll interact with SBA.

Even though the SBA has systemic failures, this does not relieve you of the responsibility to participate in resolving issues that occur with your EIDL. These issues will not be resolved on their own. You must participate in the process despite that SBA is the one that caused the issues in the first place.

Debate on Business Owner Responsibility

Linda Rey and Trevor have a long-standing disagreement about how much responsibility the business owner has regarding their EIDL despite SBA’s dysfunction.

We have been assisting small business owners who hired Aurora Consulting since January 2024 to help get their loans removed from collection activity at Treasury and returned to servicing at the SBA. Hearing their stories made Trevor more and more disgusted with the dysfunction of the SBA and its failures to help its constituents, the small business owners, properly understand the terms of the loan, understand the repayment procedures, and make payments on the loan.

Linda Rey’s perspective on this is that if you’re a business owner and have an EIDL, you’ve got to be aware of what’s happening with your loan. You need to understand the status of your EIDL, what requirements need to be tended to. Trevor pushes back often and says it’s not entirely their fault.

Linda Rey supports the basic tenet that business owners need to do a better job managing their loans, given the dysfunctional SBA.

Ill-preparedness and Excuses

Being busy is not an excuse. The first step needs to be catching yourself when you’re making an excuse. And catching yourself when you’re trying to say, this is not my fault, but isn’t it if you didn’t stay on top of the status of the loan while in SBA’s custody? You know you have this EIDL. You signed for it. It is your responsibility. And it’s your fault if you’re not following the procedures or at least being proactive, knowing the SBA is dysfunctional.

Article Analysis

In the first paragraph, Inc.com mentions how the SBA decided that it would not sell one of its “pandemic-era loan portfolios.” The Pandemic-Era Loan Portfolio is the COVID-19 EIDL program. This differs from the historical Natural Disaster EIDL program that’s been around since 1953. There’s a distinction between the two EIDL programs hence why it’s important that we clarify this term.

How Borrowers Can Default

The article claims that the COVID-19 EIDL program has an estimated default rate in the double digits. We’ll do some math later on, which will make you chuckle. Let’s talk about what does that mean. Let’s define default.

1. You’re not paying the loan back: Non-payment of the EIDL

However, you could also be in default if you engage in certain changes without notifying SBA or getting permission, such as:

2. Sold your business
3. Brought in an investor
4. Sold assets

We outline other scenarios in our SBA COVID-19 EIDL Guidebook.

In the case of EIDLs that were transferred to Treasury in late 2023, we believe it’s primarily due to default of non-payment.
But what does non-payment mean? Does it mean somebody who never made any payments and never intends to make payments?

It could mean that you’re 30 days late on your payment. By federal regulation, once you’ve reached 120 days of delinquency on payments, the SBA must automatically assign your loan for collection to the United States Treasury, which adds a 30 percent penalty. This means Treasury can garnish wages, W2 payroll, offset tax refunds, and other federal government payments.

it also means that Treasury could send your loan to a private collection agency.

SBA Communication Failures

We’ve seen folks who were attempting to make payments, but it wasn’t the full monthly amount per the loan agreement. This is where SBA failed at the Hardship Accommodation Program as a means to alleviate monthly payments while businesses were still recovering from the pandemic.

SBA never really made a formal announcement about HAP, even when folks were calling to figure out how to make a payment, even if it was less than the terms on the LAA. This is another reason we are relentless in urging you to be better than the SBA and have everything documented.

How You Can Default for Non-Payment

1. You never received a notification that your first payment was due

2. You received the notification, and the due date is unclear

3. Borrowers were/are confused about the end of their 30-month deferment period

Our estimate is approximately 1.2 million EIDLs are coming due between June and October of 2024.

Many business owners thought the deferment period started when their EIDL was approved for an increase. In fact, we’ve heard folks say, “Oh, I got my second loan.” The EIDL was one loan with an increase modification. However, we know SBA screwed this up, too, for some folks and issued a separate loan agreement in addition to the original 2020 EIDL approval.

Because of SBA’s poor training and communication, they didn’t teach people about this distinction of the program.

4. SBA’s changing technology issue

In 2022, if you wanted to pay your loan, you created an account on pay.gov. Then, in early 2023, SBA transitioned that to a new portal called Lending.MySBA.gov. And there was a whole host of problems with that.

5. ACH payments

People scheduled payments, but SBA did not access the account to transfer the funds to satisfy the payment requirement. Instead of notifying the borrower about a failed payment, they marked the file with a delinquent payment status and applied it to the next month with no notification.

6. Failure to roll out a more timely Hardship Accommodation Program

This gives you reduced payments for six-month periods. Not only did the SBA keep that a massive secret in early 2023, but they also managed it terribly. People would call and say, “I’m having difficulty making payments,” and the SBA representatives would not offer it to them to help them manage repaying the loan.

7. Relying on phone calls to the SBA

To this day, we tell people, whenever possible, not to call the SBA. You’re wasting your time and risk getting misinformation.

The Math Doesn’t Add Up

The article cites an estimated default rate of 37% of the EIDL portfolio. How can this agency calculate something that isn’t even functioning properly?

The article also cites that nearly 74% of businesses making their payments have paid or are still on track to pay. Then, how is it that there is a 37% default rate?

Another crucial factor to consider is the significant number of loans that have not yet entered full repayment. This is due to their 30-month deferment periods, which are only now ending between June and October of 2024.

Last year, between political pressure from politicians who don’t understand the program and do not support small business owners, the SBA’s Office of Inspector General would talk to any news reporter he could access, any politician he could get in front of, any congressional or senate committee he could talk to, and claimed that his Office of Inspector General, which is supposed to help the agency prevent fraud and prosecute criminal behavior, estimated massive fraud.

It was reported that they estimated half of the EIDLs were fraudulent. He claimed that 2 million out of the 4 million loans were fraudulent.

Political Pressure

In the article, it cited that Republican lawmakers have been calling for a sale of the portfolio. They put extra pressure on the SBA. We believe the politician’s soundbites are self-serving. Plus, it’s an election year.

If small businesses are the backbone of the economy, why is the SBA the most underfunded agency in government, given its monumental mission of managing the COVID-19 EIDL program AND the ongoing Natural Disaster EIDLs, and all the dysfunction behind that program and process?

In our humble opinion, the bottom line is that they have failed small businesses. Politicians don’t know small business. They are not small business owners. There may be a handful of politicians who are business owners, but for the most part, these career politicians are a joke.

Loan Portfolio Sale and Private Collectors

Selling the portfolio would require that anyone in the private market would demand a steep discount on the value of the portfolio. So that’s the “haircut” reference in the article.

The other element is that SBA is not completely ruling out that sometime in the future, they have the option to sell this portfolio off or a portion of it, and if that happens, it could be worse for small business owners than if the Treasury handles it. Why?

Suppose a private portfolio lender buys a section of this portfolio from the SBA. They’re going to come after business owners, fierce and fast for the debt because they want their money. If you’ve ever defaulted on credit card, car loan, or mortgage, and the lender sells that bad debt to a collection agency, they sell it to you with the haircut for pennies on the dollar. That means they are relentless in collecting.

Advocate for Better Support

We urge you to contact your political representatives to advocate for better SBA funding and support.
We provide templates in our SBA COVID-19 EIDL Guidebook.

While we’ve tried to peel back the layers of this article, the layers of bureaucratic mismanagement are many. We encourage taking proactive steps to ensure survival and success in these challenging economic times.

Knowing is half the battle; the other half is action.

For those seeking comprehensive guidance, our EIDL Guidebook is a treasure trove of information and instruction, offering step-by-step solutions for navigating this turbulent environment.

The post Will SBA Sell Their SBA COVID-19 EIDL Portfolio appeared first on Aurora Consulting | Commercial Financing Brokers.

Navigating Decision-Making: Balancing Data, Intuition, and Emotion

lrey — Fri, 17 May 2024 19:53:49 +0000

I’m obsessed with mistakes. Second to that is the decisions we make that lead to those mistakes. There’s a subtle yet profound distinction between making decisions and the decision-making process itself.

Every day, business owners like you face thousands of decisions, yet we seldom discuss how we arrived at them or the process we followed to evaluate our options.

I often wonder, “Do we invest enough time creating options for ourselves?”

Risk and reward are frequently discussed when managing a small business’s day-to-day operations, emphasizing the outcomes of our decisions.

Our decisions lead to mistakes we may not see coming.

The good news is that mistakes are not just missteps but opportunities for profound learning and growth.

Or are they?

The impact and lessons derived vary significantly across different types of mistakes:

1. Learning lessons that occur when we venture into new territories or adopt new processes. They are the inevitable byproducts of experimentation. While they can disrupt the status quo, they are invaluable for the lessons they impart, guiding future strategies and improvements.

2. Sloppy slip-ups result from a lack of focus or preparation. These errors can usually be prevented. While they are less about learning new things and more about emphasizing the importance of attention to detail, they remind us of the need for rigorous checks and balances within processes.

3. Bold blunders happen when we push our limits and strive for goals that lie just beyond our current reach. They are vital for growth, challenging us to evolve and adapt. Though they may lead to temporary setbacks, the resilience and knowledge gained can propel the business forward.

4. High-stakes mistakes can shake a business’s foundations. These mistakes may result from significant oversight during the decision-making process, often leading to critical reflections on business practices and strategy. The recovery process from such mistakes can redefine a company’s trajectory, fostering stronger risk management and strategic foresight.

The Process of Decision-Making

Decision-making isn’t just about choosing between options; it’s about understanding how those choices came to be.
It’s about the process—structuring our thoughts, evaluating alternatives, and foreseeing consequences.

Three Pillars of Decision-Making

I. Data-Driven Decisions

Many of us lean on hard data. It’s tangible, measurable, and seemingly objective.
Data promises a semblance of control over unpredictable outcomes and a shield against the randomness of business environments.

II. Intuition-Based Decisions

Then there are those of us who trust our gut. This isn’t about eschewing data but integrating our experiences and sometimes subconscious understanding of patterns that data alone might not reveal.

III. Emotionally Influenced Decisions

Emotions play a significant role in decision-making. They can be powerful motivators but also lead to substantial biases.
The key is not to exclude emotions but to understand their influence and mitigate the risks of bias.

Practicing ‘Worst-Case Scenario’ Analysis

With over 30 years in the insurance sector, I’ve learned the invaluable practice of ‘worst-case scenario’ analysis. While this might sound pessimistic, this method equips us to face potential failures head-on.

1. Financial Analysis: What might be the financial loss, and is it recoverable?
2. Time Consideration: What time could be lost, and is it justifiable?

This approach doesn’t just prepare us for the worst; it provides a clear-eyed view of the stakes involved, enabling better-informed and more confident decision-making.

Balancing the Scales

The practice of business decision-making requires a blend of data, intuition, and emotional insight. The challenge is to balance these elements without allowing one to dominate over the other.

It’s about awareness of their inherent advantages and the potential to lead us astray.

- How do you balance these factors in your decision-making processes?

- Do you find one more reliable than the others, or do you strive for an equilibrium among them?

Each mistake carries its weight and lessons. Embracing them not as setbacks but as integral parts of the business journey can transform potential losses into powerful gains.

Ultimately, how we respond and adapt to these mistakes determines our business resilience and capacity for seeking solutions.

Let’s discuss how we can refine our decision-making processes to foster better outcomes for our businesses and personal lives.
Share your experiences and strategies in the comments below.

Learn about our Biz Glitch 366 Project, where we discuss a Mistake of the Day to address glitches Trevor and I have made, seen, and fixed.

The post Navigating Decision-Making: Balancing Data, Intuition, and Emotion appeared first on Aurora Consulting | Commercial Financing Brokers.

Unveiling the Truth: The Saga of EIDL Loans and Treasury

lrey — Tue, 14 May 2024 18:27:59 +0000

The world of Small Business Administration (SBA) loans is a complex and often overwhelming one, especially when it comes to the Economic Injury Disaster Loans (EIDL) and how they wound up at U.S. Treasury.

In our recent video, we delved into the many reasons why EIDL loans were sent to Treasury, shedding light on the critical factors that led to this massive movement of 860,000 files.

Today, we bring you a detailed recap of the key points discussed in our video, aiming to empower you with knowledge and insights to navigate the intricate landscape of EIDL loans and Treasury dealings.

The Unveiling of EIDL Loan Journey

If your EIDL loan has been brought back from Treasury, it’s crucial to understand that the challenges are far from over. The process of repayment and dealing with the aftermath of loan movements require careful attention and proactive measures. In our video, we highlight the three main reasons behind the transfer of EIDL files to Treasury: Communication, Technology, and the Hardship Accommodation Program.

Communication: The Achilles’ Heel

One of the primary reasons for the chaos surrounding EIDL loans was the failure of communication on multiple fronts. From missing payment due date notifications to the absence of essential letters and past-due notices, the shortcomings in SBA’s communication strategy left many borrowers in the dark. The lack of clarity regarding the 30-month deferment period and the cumbersome process of accessing loan information through multiple portals only added to the confusion and distress experienced by business owners.

Technology Troubles: Navigating the Portals

The integration of technology, while intended to streamline loan processes, posed significant challenges for borrowers. The complex requirements of creating accounts on different government websites and the transition to new portals like the MySBA portal brought about a wave of technical issues and frustrations. From payment discrepancies to autopay failures, the technology hurdles intertwined with communication breakdowns to exacerbate the loan repayment woes.

Hardship Accommodation Program: The Illusion of Relief

While the Hardship Accommodation Program was designed to provide relief to struggling borrowers, its implementation fell short of expectations. The lack of formal announcements, contradictory information from representatives, and the requirement to be current on payments to qualify for assistance further compounded the hardships faced by borrowers. The program, meant to offer respite, ended up being a contributing factor to defaults and collection actions.

Empowering Business Owners: A Call to Action

As we dissect the intricate web of challenges surrounding EIDL loans and Treasury movements, it becomes evident that proactive measures and informed decision-making are essential for safeguarding your business interests. Our COVID-19 EIDL Guidebook, crafted from years of experience and interactions in the realm of EIDL loans, serves as a comprehensive resource to equip you with the knowledge and strategies needed to navigate the complexities of SBA dealings.

Navigating the Maze

The narrative of EIDL loans and Treasury actions unveils a tale of miscommunication, technological hurdles, and program pitfalls. As a business owner navigating these turbulent waters, it’s imperative to stay informed, proactive, and empowered with the right tools and insights. By arming yourself with knowledge and leveraging resources like our Guidebook, you can steer clear of potential pitfalls and safeguard your business’s financial well-being.

The post Unveiling the Truth: The Saga of EIDL Loans and Treasury appeared first on Aurora Consulting | Commercial Financing Brokers.

Massive Number of COVID-19 EIDLS Entering REPAYMENT PERIOD

lrey — Sun, 28 Apr 2024 13:46:40 +0000

AND THE NIGHTMARE BEGINS…(AGAIN).

In last week’s blog, we discussed the nightmare situations where small business owners found their COVID-19 EIDLs in default and sent to US Treasury for collection action. Terrified of losing their:

Businesses
Homes
Retirement accounts
Social Security payments
Tax refunds
Government Contract Payments

….small business owners found themselves caught in a bureaucratic quagmire.

During the pandemic, SBA made 4 Million COVID-19 EIDLs to assist small businesses survive the economic ravages of the pandemic.

Many of those loans entered repayment after a 30-month deferment period at the end of 2022. Many of those borrowers discovered that SBA’s repayment procedures and communications and technology made paying the loan practically impossible.

Starting in June, 2024, another huge tranche of COVID-19 EIDLs commence full monthly repayment requirements at the end of their 30-month deferment periods. We cannot imagine that SBA will have repaired the horrible defects in their systems and communications by that time.

Thus, we estimate that another 1.2 Million or more COVID-19 EIDL Borrowers will face the same dysfunction at SBA making repayment of their loans a near impossibility. We don’t even want to guess how many of those loans will end up in default and collection due to non-payment. We saw with the first group how many Borrowers were considered in default by SBA for non-payment even when they were actively paying and communicating with SBA.

If your loan is coming due soon, you should prepare for the worst.

We created our SBA COVID-19 EIDL Guidebook to help you navigate all the nuances and nightmares of the SBA’s bureaucratic bumbling.

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Repayment Of The COVID-19 EIDL

lrey — Sun, 21 Apr 2024 00:13:00 +0000

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

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

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

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

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

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

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

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

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

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

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

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

The post Repayment Of The COVID-19 EIDL appeared first on Aurora Consulting | Commercial Financing Brokers.

EIDL Class Action Lawsuit against SBA | Opinion: Who’s to Blame

lrey — Sun, 14 Apr 2024 17:57:34 +0000

Four years ago, Congress passed the COVID CARES Act. The legislation tasked the smallest of federal agencies–the US Small Business Administration–with the one of the BIGGEST MISSIONS in American history: the distribution of massive amounts of funding to the American Small Business community.

With uncertainty over the depth and length of the pandemic, including lockdowns, many Small Business Owners found salvation through the monies distributed by SBA during the pandemic, including the COVID-19 EIDL program.

SBA based its COVID-19 EIDL program on its long-existing natural disaster loan program, a lending directive in place since 1953 to provide Small Businesses with low-cost loans to repair physical damage or make up for lost revenue as a result of a natural disaster like a hurricane, tornado, drought or wildfire (among many other types of disasters).

Four-Million Small Businesses received COVID-19 EIDL funding, some in multiple and increasing increments. Many of these same Small Businesses had never funded their businesses with debt financing before, so the lending process, including application, distribution and repayment responsibilities were all new concepts to these business owners.

We have seen since that time how many folks seem to have “short-term memory loss” when it comes to the terrible economic ravages of the pandemic. We also see the other side of the coin with folks retaining vivid memories of the impossible process of obtaining the pandemic funds from SBA due to overly-complicated procedures, poor communications, and other systemic failures of this tiny federal agency.

Many businesses never received any funding at all, or, if they did, the funding was insufficient to provide the relief intended by Congress.

We know that many people today, those with that “short-term” memory problem, often say, “I never wanted this COVID-19 loan. The government should have given me this money for free. Now I’ve got a loan I’m having a problem paying it back and the SBA…and the SBA…and the SBA…and…and…AND.”

We respond, saying, “Yes you’re right the SBA has a lot of difficulties but the SBA was charged with a mission during the pandemic by the Congress of the United States and they delivered on the mission. SBA accomplished the goal: they put money into your hands and into the American economy to get the economy on track during a pandemic.“

While we’re all blaming the SBA and complaining about the SBA and getting upset with the SBA, we’re forgetting that it’s the people in Congress who have let you down.

The Congress controls the purse strings of the US Treasury. And Congress has failed the SBA, and by extension, the American Small Business Owner, by failing to properly fund the SBA.

Congress has not reauthorized the SBA in over 20 years. In 2023, by contrast, Congress reauthorized the Federal Aviation Administration as they do with other federal agencies from time to time. Congress gave the FAA a substantial increase in funding to hire new air traffic controllers and implement new technologies to keep us safe in the skies.

But what about you small business owners?

Congress has not reauthorized the SBA in over two decades and between natural disasters such as Hurricane Katrina, Superstorm Sandy, wildfires in Maui and California, and many other disasters across the United States, the SBA can barely keep up.

Never mind that SBA is tasked with collecting the repayments on those 4 Million EIDLs from the pandemic.

The SBA in our opinion is underfunded, overworked, and overwhelmed.

SBA today has a huge mission to deliver on with minimal resources thanks to Congress’ failure to properly fund the agency.

Next time, take a moment before you get upset with the SBA. Take the approach that we take when dealing with them: take a deep breath, find a few ounces of extra patience, and understand that you’re dealing with a bureaucracy and there is a procedure and a process for everything, yet the agency is working stretched to the limit.

If you follow that advice, then, yes it’s going to feel frustrating but you’re going to have a better comprehension that SBA’s failures can be repaired by Congress.

Contact your political representative as a Small Business Owner CONSTITUENT and tell your congresspeople to get SBA more money.

In the meantime when you deal with the SBA, try to have a little more patience and a little more charity because those folks do have good intentions and they are trying to do their best for you, in our experience.

We created our “SBA COVID-19 EIDL Guidebook” as a comprehensive resource for you and managing your COVID-19 EIDL.

We discuss everything from “Hardship Accommodation” to best practices for repayment to closing your business or changing ownership and so much more.

You can purchase your copy of the guide by CLICKING HERE

You get FREE updates through December 2024 when you purchase now. And updates are coming to include expanded Hardship instruction and Treasury Dispute process and strategy.

The post EIDL Class Action Lawsuit against SBA | Opinion: Who’s to Blame appeared first on Aurora Consulting | Commercial Financing Brokers.

Mistake Management: Future-Proof Faux Pas

lrey — Sat, 13 Apr 2024 00:13:31 +0000

In the world of small business, the ability to anticipate and prepare for potential pitfalls is more than a necessity; it’s an asset.

And yet, many business owners wait for chaos to strike to then try to pick up the pieces hoping that a resolution is around the corner or at least someone, anyone will be on the other end of their 911 call.

I know it and you know it: being proactive isn’t sexy.

Who has time to try to forecast a catastrophe? The “It won’t happen to me.” is an easy default when you think you’re one of 100 Gajillion people.

Who’s gonna care about my little hiccup?

We’ve seen countless times how folks have a litany of “reasons” for their oversight not realizing they’re excuses for responsibilities neglected.

They believe that they either had no contribution in the matter or their decision-making (or lack thereof) had nothing to do with what’s collapsing all around them.

However, what we know to be true is that understanding errors before they happen can mitigate dire circumstances.

I love this word, “mitigate.” I first experienced it when I was studying for my insurance license.

Believe it or not, there’s a contractual obligation when you own property, such as a home or a building, and physical damage occurs. A homeowner and/or property owner must mitigate further damage.

This is because mitigating additional damage prevents unnecessary costs beyond what’s already occurred. And, when an insurer is paying to repair the damage, the insurer will impose the responsibility onto you so that no additional costs are incurred because you couldn’t be bothered.

Proactive Mistake Management in the Workplace

Mistake management, aka being proactive, fosters a culture of continuous improvement, adaptability, and creativity. Mistakes in business are not just stumbling blocks; they’re opportunities for growth and learning.

Anticipating errors before they occur involves setting up systems and processes that minimize the impact and turn disasters into teachable moments. This approach allows businesses to grow steadily without the setbacks that unplanned mistakes can cause.

Our YouTube channel @SmallBusinessAdvice, highlights the importance of strategic planning in various areas of business to manage business growth. Through expert interviews and real-life case studies, we showcase how businesses that plan for potential mistakes are more likely to succeed and scale efficiently.

Create a Cohesive Culture

Knowing potential mistakes ahead of time can significantly impact the culture within a business. It instills a sense of confidence and security among employees, knowing that the leadership team values foresight and diligence.

This proactive attitude towards mistake management encourages a more open, innovative, and collaborative work environment.

Businesses with a proactive approach to problem-solving tend to have higher employee engagement and morale. This positive work environment leads to increased productivity and fosters a culture where employees feel safe to express new ideas and solutions.

Anticipating Mistakes Requires Creative Thinking

Science is fun especially when it promotes increased brain function. When we combine problem-solving, prevention, and creativity, this drives innovation for a small business.

By understanding the potential errors that could occur, businesses can develop unique products, services, or processes that differentiate them from the competition.

Playing it Safe: The Art of Risk Management

Effective risk management is crucial for the survival and success of any business. By anticipating possible mistakes, businesses can create strategic plans that include risk assessment and management strategies.

This preparedness allows them to handle unexpected situations more efficiently, reducing costs and the time it takes to recover.

Businesses that integrate risk management into their business strategy are better equipped to handle the ups and downs of business cycles. They’re more resilient and can navigate through challenges without derailing their long-term goals.

Resilience: The Art of Rebounding

When a business develops its culture and brand around being proactive and managing mistakes, it earns the trust and loyalty of its customers.

This reputation for reliability and thoroughness becomes a part of the brand’s identity, distinguishing it in a crowded market.

The Ability to Anticipate

Being proactive and knowing mistakes before they happen offers numerous advantages to small businesses. It not only helps in avoiding costly errors but also plays a crucial role in driving growth, fostering a positive organizational culture, enhancing creativity, managing risks, and building a resilient brand.

In the world of small business, those prepared to face potential challenges head-on are the ones who write the success stories.

Find out more about the Biz Glitch 366 project and be ahead of your next mistake.

The post Mistake Management: Future-Proof Faux Pas appeared first on Aurora Consulting | Commercial Financing Brokers.

COVID-19 EIDL Hardship Accommodation Update: Change of Ownership

lrey — Sat, 06 Apr 2024 19:45:17 +0000

Many struggling businesses are requesting a reduced payment through SBA’s hardship accommodation program. SBA will allow you to reduce your monthly payment to as little as 10% of the required payment for a period of 6 months.

A request to extend the 6 month period can be presented to SBA for up to 3 extensions for a total of 2 years of lowered payments.

SBA updated its Hardship Accommodation Program (HAP) guidelines on February 15th, 2024. As per those guidelines, your loan does not have to “current” on payments to be approved for the HAP.

If your loan was assigned to US Treasury, but is not delinquent more than 180 days, SBA can recall the loan from US Treasury for regular servicing when the Borrower contacts SBA to reactivate a repayment action, via the HAP request process.

For loans less than $200,000, a first request for HAP can be accessed directly on the MySBA portal.

For loans of $200,00 or greater, send an email to cesc@sba.gov SBA will respond with the HAP application form.

BUT…if your business had a change of ownership, or is considering a change of ownership, SBA will NOT approve a hardship accommodation request until a separate change of ownership process and SBA approval is completed.

You must submit the SBA “Change of Ownership” form. The new owner(s) will be required to submit SBA Form 912 and any other documents SBA requires. Note that SBA may require payment of the COVID-19 EIDL–partially or in full–to process a Change of Ownership request.

#SBA #COVID-19EIDL #EIDL #EIDLForgiveness #Forgiveness #LoanForgiveness #SBAEIDL #SBAForgiveness #SmallBusiness #SmallBusinessLoan #SmallBusinessLoans #PandemicRelief #PandemicLoans #HardshipAccommodation #EIDLHardshipAccommodation #EIDLReducedPayment

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COVID-19 EIDL Forgiveness: NOT HAPPENING

lrey — Fri, 29 Mar 2024 20:28:04 +0000

Often we’re chided and derided for our communications about the EIDL program and the SBA. We operate under the credo that we refuse to tell folks what they want to believe when it’s inaccurate or flat out delusional.

We prefer to share the tough truths so people can better prepare and manage expectations for their business.

We built a substantial reputation for our expertise in this way of sharing the facts, including having media reporters request our insights, and even having a Client referred to us by their Congressional representative.

We assisted our Clients to obtain $70M in approved SBA COVID-19 EIDLs during the pandemic. With our free YouTube videos, we estimate small business owners used our expert knowledge to obtain another $30M in approved loans. As such, we’ve heard from many, MANY small business owners who thanked us for our free advice and how they used the expertise we shared to get their loans approved.

𝙇𝙚𝙩’𝙨 𝙜𝙚𝙩 𝙩𝙤 𝙖 𝙝𝙤𝙩 𝙉𝙊𝙉-𝙏𝙊𝙋𝙄𝘾.

We know there is constant talk about how Small Business Owners with COVID-19 EIDLs believe their loans should simply be “forgiven” and the debts discharged away from their responsibility.

We discuss this topic frequently on our YouTube video channel in our typical manner: with facts, not magical fantastical thinking.

Since the days of the pandemic we presented our viewpoint that ONLY Congress can modify the COVID-19 EIDL program. We expressed our expert opinion that it was unlikely these loans would ever be forgiven, but we presented a concept that would be helpful to Small Business Owners with these loans: Congress could modify the loans and lower the interest rate to make the monthly payments more affordable.

A few months back, we presented research in one of our guidebooks showing evidence that supports our contention that COVID-19 EIDLs would never be forgiven. We want to repeat a consistent theme we return to time and again when folks complain about the SBA and the EIDL program:

𝓒𝓞𝓝𝓖𝓡𝓔𝓢𝓢

SBA’s systemic dysfunctions are legendary and have a long history dating back long before the COVID-19 pandemic. Small Business Owners have too often faced substantial obstacles to receiving assistance from this federal agency.

𝐌𝐚𝐧𝐲 𝐟𝐨𝐥𝐤𝐬 𝐜𝐚𝐥𝐥 𝐭𝐡𝐞 𝐒𝐁𝐀 𝐚 “𝐝𝐢𝐬𝐚𝐬𝐭𝐞𝐫” 𝐨𝐟 𝐚 𝐛𝐮𝐫𝐞𝐚𝐮𝐜𝐫𝐚𝐜𝐲.

While we agree that SBA is a disaster, that damage was caused by the United States Congress. Congress has failed to fully support American Small Businesses by providing the requisite funding to the United States Small Business Administration.

Congress continues that failure by failing to reauthorize the SBA as a federal agency for more than 2 decades, for failing to provide the additional funding SBA needs to improve its systems and manage the repayment of 4 Million COVID-19 EIDLs.

If you are unhappy with the SBA or the COVID-19 EIDL program, your complaint is with CONGRESS, not the SBA.

In our opinion, this will never happen based on historical precedent and recent behaviors by certain politicians. Express your disdain and dissatisfaction with the SBA by contacting your political representatives.

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