Will SBA Sell Their SBA COVID-19 EIDL Portfolio

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.

EIDL blueprint CTA 2024

Unveiling the Truth: The Saga of EIDL Loans and Treasury

Youtube thumbnail with linda rey and trevor and the caption of 3 ways sba failed you

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.

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Massive Number of COVID-19 EIDLS Entering REPAYMENT PERIOD

feature image for blog: EIDLS ENTERING REPAYMENT PERIOD

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:

  1. Businesses
  2. Homes
  3. Retirement accounts
  4. Social Security payments
  5. Tax refunds
  6. Government Contract Payments

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

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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

feature image for our BLOG: Repaying EIDL FAILS

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.  

YOUTUBE THUMBNAIL with Trevor and the caption BAD ADVICE IS COSTLY AND EXHAUSTING

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.

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

AI IMAGE of a group of startled folks in a town hall meeting

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.

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COVID-19 EIDL Hardship Accommodation Update: Change of Ownership

FEATURE IMAGE for blog: applying for hardship is a hardship

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.

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COVID-19 EIDL Forgiveness: NOT HAPPENING

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.

ⓄⓃⓁⓎ  ⒸⓄⓃⒼⓇⒺⓈⓈ  ⒽⒶⓈ  ⓉⒽⒺ  ⒶⓊⓉⒽⓄⓇⒾⓉⓎ  ⓉⓄ  ⒻⓄⓇⒼⒾⓋⒺ  ⒸⓄⓋⒾⒹ-①⑨  ⒺⒾⒹⓁⓢ

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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Don’t Surrender to the Bureaucracy

FIGHT US Treasury Collection on your COVID-19 EIDL. 

Since late 2023, the United States Small Business Administration (SBA) transferred tens of thousands of COVID-19 EIDLs to the United States Treasury for collection action.

Small Business Owners across the country are facing the possible destruction of their businesses, their livelihoods, and (in many cases) ruination of their personal financial lives.

In the past 4 months, we’ve been inundated with requests for assistance with this egregious situation. At first, we were reluctant to assist because we didn’t know how we could assist and, worse, we could not know the result of any assistance we could provide. 

A collection action against a defaulted loan is, after all, a collection action designed to recoup funds lost to non-payment of these federal debt obligations.

We heard so many horror stories about SBA’s failures to either communicate clearly on repayment assistance or to completely fail with the otherwise simple repayment protocols required for loans.

Business owners faced collection actions through no fault of their own. We’ve heard from folks who set their loans on auto-pay (as they do with other regularly scheduled bills), only to learn their loans were sent for collection with NO notice and due to the auto-pay feature failing.

Small business owners faced other insurmountable challenges, from the inability to access SBA’s MySBA payment portal due to technology failures and poor SBA communications to payments made through guidance from SBA representatives to prevent collection actions, or to obtain approval from SBA for temporary reduced payments due to hardship. In these instances, the EIDLs were ultimately shipped off arbitrarily by SBA for collection.

In our response to the many requests for assistance, we created a comprehensive US Treasury Dispute consulting package. Our package includes efficiently prepared forms and letters to dispute the collection actions. We went one step further to use our general experience in lending, and our specific experience with the COVID-19 EIDL program, to develop strategies to accompany the dispute paperwork.

We haven’t seen the desired results, yet, of our Clients’ loans being returned to SBA for regular servicing. But we remain cautiously optimistic as we watch this drama work its way through the federal bureaucracy.

Today we received a comment on one of our YouTube videos stating the case to “surrender” in the face of these terrible collection actions.

If your business has been sent for collection to the US Treasury, through no fault of your own, through your repeated attempts to communicate a repayment process with SBA, then we believe you have no choice but to FIGHT.  

Never say “too late” to take action on these collection accounts.  Don’t apply your timeline to a government agency. Here are three things to consider:

First, US Treasury has been completely overwhelmed by the sheer number of defaulted COVID-19 EIDLs sent over by SBA.

Second, as we learned during the pandemic, while assisting our Clients in obtaining $70M in approved EIDLs: the bureaucracy moves at its own speed and gets to things in its own time.

Third, don’t ignore the fact that US government agencies have a hard and fast mandate to address issues presented by constituents—such as taxpayers—and respond, including to official disputes filed by Small Business Owners.

The fact this hasn’t happened yet is only based on the small business owner’s standards. We have a different opinion and approach.

Trevor’s rule of “Always Apply” when it comes to the business loan process, stands true with the US Treasury Dispute process: SUBMIT and FIGHT.

If you surrender due to urban mythological tropes then you don’t really care about your business or your livelihood. If you choose to FIGHT, then a result will surely happen, whether positive or negative.

We saw it firsthand during the pandemic. It will happen again.

FILE your DISPUTE. And FIGHT.

If you need help, we are accepting new Clients for our US Treasury Dispute consulting package through March 31st, 2024.

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Business Owner vs SBA vs Congress

 

The United States Small Business Administration (SBA) is under tremendous pressure from two sides with the COVID-19 Economic Injury Disaster Loan (EIDL) program. Under the CARES Act of 2020, the loan program provided massive financial support to Small Businesses during the pandemic. 

Now, many of those loans are in default status. A default status can occur due to any number of reasons including a missed payment or three, a failure to make full payments, or a failure to make full payments, or the ultimate default: failure to make any payments at all by ignoring the debt obligation.

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On the one side is the Small Business Owner who seeks Hardship Accommodation to repay the COVID-19 EIDL due to continuing economic challenges as they manage their businesses in these post-pandemic times.

Then, there’s the powerful political pressure on the opposite side by the politicians.

We’ve seen in recent months how members of the United States Senate and the House of Representatives—Senators and Congresspeople—are thumping their chests for political talking points and demanding that SBA collect on every penny of COVID-19 EIDLs, including demanding SBA pursue collection activities against small businesses that defaulted on their loan payments.

This second aspect is probably the most brutal because these same politicians are often the same people pursuing sound bites of “Small Business is the backbone of the American economy.”  And yet…here we are.  They would prefer to beat the drums of debt collection to drive business owners into bankruptcy, to heap massive debts with penalties and interest upon their shoulders for years, or even decades to come, with nary a care about their literal constituents, the small business owners.

For our part, as SBA EIDL experts, we’ve seen all sides of this terrible situation.

As a result, we often defend the people working at SBA. We believe they are good people struggling to do their best to meet this huge task dumped on them by the politicians without the requisite support necessary for a mission of this magnitude.

A viewer of our YouTube channel commented in response to our more forgiving and understanding perspective of SBA, “Sorry folks, you’re wrong the SBA doesn’t care…”

We responded, “You’re attributing some nefarious quality of personality to a bureaucracy. That is, on the face of it, absurd.”

We’ve spoken to hundreds of SBA representatives and the majority truly do care about their constituents, the small business owner.

What you need to do is to blame the Congress of the United States for this debacle because the SBA is underfunded, overworked, and overwhelmed as an agency tasked with such a massive undertaking, both during and after the pandemic.

First, Congress required this tiny federal agency to manage the distribution of the huge tranche of pandemic relief funds to small businesses. As task for which SBA was ill-prepared and inexperienced.

Second, Congress is now beating the drum about collecting on the debts with no regard for either the small business owners facing economic challenges nor the SBA inexperience in collecting debts on such a huge scale.

The Congress has not reauthorized this federal agency in more than two decades. By comparison, in 2023, Congress reauthorized the Federal Aviation Administration, providing expanded regulatory authority and a pile of money to upgrade technology and hire air traffic controllers.

No such undertaking is in the works for the SBA.

We appreciate you as a follower of our channel, but, please, before you tell us we are “wrong,” try to take a moment and reflect on our expertise in this area, the expertise drawn from real-time experience that informs our advice, our guidebooks, our consulting services and our YouTube videos.

Sorry, but not sorry.

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Business Owners Constantly Complain About SBA

We see lots of anxiety, anger, and acrimony about the Small Business Administration’s (SBA) handling of the vital pandemic relief program. We see it because of the Small Business Owners who request our consulting services for our expert advice and the folks who comment on our YouTube videos about the COVID-19 EIDL program.

We understand because we’re experienced financing professionals who feel similar frustrations, and have done so since the early days of the pandemic. There are multiple and miscellaneous dysfunctions from poor communication protocols to confusing instructions. 

Lately, the disgraceful exercise where SBA is sending loans to U.S. Treasury for default and subsequent collections without thoroughly engaging with the Small Business Borrower to work out a repayment plan.

Our opinion on this topic, especially after having worked on hundreds of EIDL applications and spoken to hundreds (or maybe thousands) of SBA representatives and thousands of Small Business Owners since March of 2020, is that, for all its dysfunction as a bureaucracy, the SBA is not to blame for the problems experienced by well-meaning and responsible Small Business Owners.

In our opinion, Congress is to blame, here, not SBA.  

In response to the pandemic in 2020, Congress dumped this HUGE project onto this tiny, underfunded federal agency to put vast quantities of money out into the American economy in the form of loans, forgivable paycheck loans, and grants.

Second, Congress (specifically certain politicians) are screaming and shouting at SBA to make every effort to collect payments on the pandemic loans including EIDLs and PPPs since late 2023. The political pressure is powerful and unnecessary.

In both instances the Congress has NOT provided the additional funding SBA needs to manage these huge enterprises.  Congress has not reauthorized SBA as a federal agency in more than two decades.

SBA is a “limited” direct lender.

The SBA doesn’t have sufficient experience as a “lender” to manage the tremendous volume of COVID-19 EIDLs that need to be repaid: 4 MILLON.

Prior to the pandemic, between fiscal 2018 and 2022, the SBA approved an average of approximately 26,284 applications per YEAR for natural disasters acting as a “direct lender.”  That number includes natural disaster loans for physical damage to small businesses, homeowners and renters.

Making natural disaster loans remains a small part of the overall SBA mission.

SBA made small business natural disaster loans on average less than 10,000 a year between 2018 and 2022.

Source: GAO Report To Congress: Disaster Loans

Quote from SBA’s recent press release on Fiscal Year 2023: $670 million in disaster assistance for small businesses: Throughout the year, the SBA stepped up in moments of crisis to deliver critical support to business owners and communities in need. FY23 saw $670 million in relief delivered to more than 5,200 businesses across America.

Source: SBA Press Release 23-90

SBA’s Mission as defined by Congress: The United States Small Business Administration aka SBA was created by an act of Congress in 1953. The legislation acknowledged the lack of working capital available to small business owners, notably women, African Americans, Hispanic Americans, Native Americans and Veterans of the armed forces.  

The legislation included the natural disaster loan component, but that was far from the primary mission of the newly-formed federal agency.

Mostly what SBA does to perform it’s mission is to provide guarantees to commercial lenders for SBA loan products, and secondarily to provide support to small business in the form of education, grants, and advice. Note the commercial lenders make the SBA guaranteed loans using the lenders’ funds, not SBA funds. SBA’s role is to make the lender “whole” in the event of a defaulted loan.

Source: Small Business Act

People are talking about filing a class-action lawsuit.

As for lawsuits, like our opinion on EIDL Forgiveness, this is a waste of time to consider, reflect on, talk about.

As of this writing SBA clearly states that COVID-19 EIDLs are not forgivable. Our opinion, based on our extensive research on this topic, is that these loans will never be forgiven.  (We hope to be wrong)

Suing the SBA is, in our opinion, similarly fantastical magical thinking.

A group of business people sued SBA during the pandemic in response to the Restaurant Relief Fund program.  These business owners claimed that SBA’s direction of funding to “priority” groups from traditionally underserved communities was unconstitutional. The lawsuit caused the program to cease assisting restaurants all across the country as SBA halted the grants in response.  

And the lawsuit was ultimately tossed out of court. A. Complete. Waste. Of. Time.

Source: Lawsuit

Whether you are struggling with repaying your COVID-19 EIDL, or if your business has already failed, or you are managing (or soon to begin) repayment, we recommend the following strategy: Focus on the things you can control and avoid the magical thinking of inexpert people who post random nonsense on the internet because they want it to be true.

Small Business Owners can control the following:

  • Make payments

  • Check your MySBA portal weekly, especially for “messages”

  • Comply with the requirements of the EIDL Loan Agreement

  • Apply the requisite responsible diligence to this loan program to avoid problems

We offer the following assistance to Small Business Owners with COVID-19 EIDLs:

These are the options for assistance we can provide:

  • COVID-19 EIDL General Consulting: we assist with various requirements and procedures under the terms of the EIDL Loan Agreement including change of ownership, sale of assets, lien release requests, assumptions, and more. Email Curious@

  • YouTube videos: we have over 500 videos to help Small Business Owners manage the SBA’s EIDL program’s various aspects

One-Hour Consulting Call

We offer a one-hour consulting call for $275.00. On the call Trevor will review with you different aspects of your COVID-19 EIDL or, if your loan defaulted and went to US Treasury for collection, he will discuss options at this stage where your EIDL is with US Treasury:

  • Dispute

  • Negotiating an Offer in Compromise

  • Repayment plan

  • Closing the business

  • Bankruptcy

  • Long-term consequences of a defaulted EIDL

IF you still wish to book a call, CLICK HERE

US Treasury Defaulted COVID-19 EIDLs: DISPUTE

Since late December, 2023, SBA transferred massive numbers of COVID-19 EIDLs to US Treasury for COLLECTIONS. EVEN IF the Borrower was making payments and communicating with SBA about their difficulties in making full payments. This is a DISGRACE and we blame SBA’s dysfunctional systems for not providing more effective repayment strategies for people trying to repay their loans.

Is your COVID-19 EIDL transferred to US Treasury? If so, you should immediately submit a dispute to fight this egregious harm to small businesses in America.

Our US Treasury DISPUTE Consulting service is available for a limited time for $825.00.

  • Fact Collection Phone interview about repayment challenges

  • Collection of business documents to accurately complete dispute forms

  • Completion of US Treasury dispute form

  • Signature protocols

  • A completed package with supporting documents for your dispute

  • Instructions to submit your dispute

  • Ongoing strategies to dispute the default with SBA included in the package

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