Planning and Projections for Your EIDL Loan

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

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

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

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

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

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

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

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

QUESTIONS

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

REVENUE

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

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

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

PROACTIVE & PREPARED   Get a simple, easy to follow guideline on what you can include in your business plan to keep you focused on growing your business.

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.

YOU Tell the Bank the Amount of Your PPP Loan

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.

Calm, Cool Heads Collect During COVID

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.

Apply for Disaster Financing

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

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

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

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

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

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

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

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

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

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

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

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

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

Business Financing Documents Checklist

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

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.