Ambiguity and Uncertainty

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This is unacceptable.

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

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

Tracking Receipts for Your EIDL Funding

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

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

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

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

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

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

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

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

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

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

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

YOU Tell the Bank the Amount of Your PPP Loan

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Disqualified? Thank you Politicians!

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

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

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

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

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

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

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

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

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

Reconsideration Step by Step

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

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

Documents to include:

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

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

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

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

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

Next steps after submitting:

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

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

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

Calm, Cool Heads Collect During COVID

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

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

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

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

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

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

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

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

We know that it is worth the wait.

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

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

 

Apply for Disaster Financing

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How to Apply for an EIDL Loan

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

Small Business Must Roll the Dice

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

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

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

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

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

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

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

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

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

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

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

Summarize your Finance Package

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

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

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

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

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

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

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

If you’d like a copy of our Documents Checklist, click HERE.

If you have questions on the best way to present your financing request to a Lender, email us at Curious@AuroraConsulting.biz and we’ll be happy to provide advice.

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.

Reach out to discuss if your answers to these aforementioned questions would suffice. We are your advocate in the process.

Email us at Curious@AuroraConsulting.biz.

Cobble-Together Business Loan Strategies

a ballerina on her toes with an addidas sneaker on the other foot.
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When Linda Rey was building her Independent Insurance Agency, she had a mantra that goes back 20 years ago. We think it still applies: “There’s no immediate gratification in a long term Strategy.“

Different Solutions Cobbled Together.

When confronted with challenging circumstances for our clients to find a business loan, one of the creative solutions we lean towards is to bring together different financing solutions. What do we mean?

We cobble together financing solutions to come up with a higher number. 

Maybe that number meets their original request, or maybe it only comes close, but maybe it gives the client sufficient capital to get started on a short term, “cobbled together” solution for our longer term financing strategy. 

Our thinking is that it is better to start somewhere. Follow the yellow brick road.

What it is about us that allows us to cobble financing solutions together? No, we’re not talking about shoe repair! We’re Brokers and we work for the client, not the bank. That’s first and foremost.

Secondly, as a Broker, we have access to multiple products with different lenders.

An important consideration we’re mindful of when cobbling together the financing is to be mindful of the client’s longer term horizon. Depending on what’s on that horizon, there may be risks and challenges with certain types of short term solutions today, especially with something like seasoning.

When we talk about seasoning with cobbled-together-financing, we mean if you have a short term solution today that gets you over the hump and gets you started with your financing strategy, that short term solution may have to be seasoned for at least a year and showing on tax returns and other financial documents if you want to come in with a certain type of financing product on the other end of it. 

So this is an important consideration because what solution we find today could affect your ability to access other finance products tomorrow.

We’ve discussed previously about how you should be preparing your financials with the thinking ahead of time that you may be securing financing. We think of ourselves as brokers but with a very long-term focus for our clients because we love business success stories.

Sometimes you have think short-term to achieve long-term goals. ~ Linda Rey

For example, we have a client who just purchased a commercial property recently with our assistance and our advice based upon cobbling together a short term solution on a long-term strategy. 

This client did not have sufficient down payment to qualify for a commercial mortgage to purchase the commercial property. We referred that client to a colleague of ours who does residential mortgages. That colleague refinanced the client’s house and the client paid cash for the commercial property. Now we’re working on a smaller financing package to provide some working capital to decorate the new office space and do some much needed improvements and renovations on the property including a new roof. This is a good example of a successful cobble-together-financing solution.

In the longer-term, we’re going to to find a way to finance their commercial property to take out the short-term financing, and return the client’s primary residence back to a zero mortgage replacing everything with financing on the commercial property because tax wise, it’s a smarter move for the client’s business.

When you think something isn’t possible, call us or email us and make sure because you don’t want to wait too long for something that can be done RIGHT NOW.

Email us at Solutions@AuroraConsulting.biz.