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.

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.

Play Video

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.

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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Forced to Take the COVID-19 EIDL

We received an inquiry from a Small Business Owner with a COVID-19 EIDL. Her (unedited) inquiry reads as follows: 

“I was forced when I feel under duress during Covid to accept a loan from the SBA that I did not want to be forced into simply because the workers I had were independent contractors versus employees. The nature of my business is most of the instructors will not be employees. They are independent contractors so we are in a bind. If I did not accept the loan, my business would have immediately collapsed, and I would have lost all of my students and the instructors as well. Do you offer assistance with this to avoid bankruptcy.”

We’re passionate in our commitment to supporting Small Business. That’s why we give away a lot of free expert information and advice. It’s why we offer a one-hour paid consultation call where you can speak directly with Trevor, pick his brain, gain some clarity, and, sometimes, he’ll call the SBA with you on the line to help with challenging situations or questions.

The business owner quoted above never followed up with us to book the one-hour paid consultation call. It’s a shame because we would have done two things to help. 

First, we would’ve explained the process of remediation on the repayment of the COVID-19 EIDL, with a focus on avoiding default and bankruptcy. Second, as we’ve seen in many of our calls, we would have provided some relief and in fact, other business owners have often said at the end of the call, “I feel so much calmer now.

Trevor was a Mortgage Banker for 30 years. He learned a long time ago how to explain complicated financial procedural concepts to Clients, and how to remove emotion from the process. But let’s address something in the quoted message above about being “forced into” accepting the SBA’s COVID-19 EIDL.

First and foremost, no one forced anyone to take those funds. The application process was 100% voluntary based on need. If you needed the support immediately or thought you might need it soon, the funds were there for you to request.

Next, it appears the business was not eligible for the Paycheck Protection Program (PPP) loan(s) due to the nature of the employment relationship between the business and its workforce. 

The business owner states that the instructors for the business are not employees, they are independent contractors. She states that “…the nature of my business is most of the instructors will not be employees.

Let’s review and discuss these concepts and challenges.

The SBA’s PPP loan became available through approved Lenders as a result of legislation included by Congress in the COVID CARES Act. The PPP provided a low-interest rate of 1%. If the PPP loan was issued prior to June 5, 2020, it would have a two-year repayment term. After June 5, 2020, the repayment term is five years.

The program provided for 100% Forgiveness of the loan, essentially making this a “grant” of sorts. The purpose of the program was to keep people paid as employees, not needing to request Unemployment benefits. 

For example, if your business was required to close to the public or to staff due to state-mandated pandemic lockdowns, the Congress of the United States wanted your business to continue to pay your employees their salaries as if the business was open.

The loan solved two problems. 

First, avoiding the government process of Unemployment benefits both in terms of cost to the government and access to receive those benefits by the unemployed workers. In other words, the employee would still get their regular paycheck, and not have to go through the worry and wait for an approval of the unemployment benefits.

Second, the business could maintain its staffing so that, once lockdowns were lifted, the business wouldn’t have to go out to find new employees and replace departed employees.

While we worked to help our clients obtain approvals for the SBA’s COVID-19 EIDL program as paid consultants/preparers, we provided a courtesy service to many of those clients to process their PPP loan applications. We were not permitted by law to charge a fee for assisting. We processed several dozen PPP loans.

One issue that kept coming up during our review of the eligibility of a client’s PPP application was this misunderstanding of employee versus independent contractor. When we asked the question, “How many F/T employees does the business employ?” we would get an answer, for example, “9 employees, not including me (the business owner).” 

When we reviewed the business tax returns, under the line for “Salaries/Wages” we’d often see that line item blank. That means no W2 employees. That means the “9 employees” are not actually employees; they’re independent contractors. 

And, sure enough, on the line of the tax return for “Contract labor” there would be a dollar amount entered.

We’d have to call the business owner to explain the difference of employment classification and the reason why the business was not eligible for the PPP loan. We explained how the independent contractors working for the business would need to apply for their own, individual PPP loans because they were essentially small businesses.

Many of the business owners pushed back on our assertions of the ineligibility for the PPP loan. “But they work for me” was a common response. Okay, well, by itself, that’s a violation of IRS and Department of Labor employee classification rules. Let’s set that aside for now. 

In that particular moment, we attempted to request PPP loan assistance, and it didn’t matter what the business owner thought about their relationship to the people who worked for the business. They were not employees, thus, no PPP loan.

The proceeds of the SBA’s COVID-19 EIDL could be used to pay employees. The program’s purpose is to provide the business with money to make up for revenue lost due to a disaster to be used to pay ordinary operating expenses.

This raises the question, “Can you use the COVID-19 EIDL funds to pay independent contractors working for the business?”  

If the funds were used to pay those contractors while the business was on lockdown, without the contractors actually doing any work, then the answer is most likely, “No, you cannot use the funds to pay independent contractors.”  

As previously mentioned, those independent contractors would have to apply for their own, individual PPP loans.

On the other hand, if the independent contractors were performing actual work services for the business at the time of the lockdown…and after…then, yes, the business could use the funds to pay those contractors as long as it matched previous operational standards of work and payment. 

Meaning, if your independent contractor provided, let’s say, 38 hours of billable work hours to your business before the pandemic, and continued to provide similar services during the pandemic, then, yes, you could pay those contractors as an “ordinary operating expense.”

As we’ve discussed so far, many small business owners had challenges with this misclassification of their working staff.  And those challenges became a horror-movie-level monster when these businesses were confronted with their need for the PPP loans, and the use of the EIDL funds.

We don’t know where the concept of misclassification of employees came about. 

However, we know it’s been happening for quite some time. And we don’t know how it came to be that so many small businesses jumped on the “independent contractor” bandwagon. 

What we do know is that too many small businesses treat their actual employees like independent contractors. From the employer side, the business saves on contributions to payroll taxes, disability insurance, unemployment insurance, and more. 

The business avoids uncomfortable situations revolving around the issues of employee benefits. And most of the time, the business treats the independent contractor like an employee with work rules, scheduling requirements, and more. 

The true definition of an independent contractor is that a person sets their own work schedules and standards. The small business can only provide basic guidance on the task to be achieved by the contractor. The independent contractor determines if, when, and how they will accomplish the result requested by the business.

Don’t believe us? You can read the classification rules on the IRS website for more information. 

But these misclassification issues are legendary around the United States. Employees are paid as independent contractors but are required to work under employment rules and standards.

For their part, we’ve seen how the “employee” who’s really an independent contractor thinks they’re doing great because they get more money in their paycheck. They’re not aware of two important features of their “misclassified” employment status.

First, they’re not employees. Their employer literally cannot tell them what to do, when to do it, and so much more. Secondly, the misclassified employee is responsible for their own payroll taxes, including paying a “self-employment” tax on their annual tax return. Those additional taxes they pay actually make their overall annual take-home pay LESS than if they were properly paid as a W2 employee.

Let’s return to the email from the business owner who was “forced” to take the EIDL.

While we never spoke with her because she didn’t book the paid consultation call, we’ll hazard the guess that she’s guilty of the misclassification of her staff like so many other business owners.  We’re confident because of her annoyance at being blocked from the PPP loan due to the employment classification of “independent contractors.” 

We make this fair assessment because of our previous experience during the pandemic of speaking to thousands of small business owners, and how so many of them misclassified their employees.

Somewhere along the way, this small business owner decided to pay her employees as independent contractors, probably as a result of a conversation with her tax professional or bookkeeper so that she could lower her payroll expenses and improve bottom-line cash flow.  We’ve seen this too often.

That strategic decision she made is the reason she was “forced into” the COVID-19 Economic Injury Disaster Loan, not for any other reason, but a bad decision she made to operate her business.

But is it a bad thing to have received the COVID-19 EIDL? We don’t think so.

The program for the COVID-19 pandemic was a modified version of the SBA’s traditional natural disaster loan; a program created in 1953 to help small businesses recover from a natural disaster. The loan program helps to repair physical damage from the disaster and recoup lost revenue as a result of the disaster. 

The loans are low cost with terms as long as 30 years. That makes these loans very attractive from an affordability perspective. 

We know from our experience of speaking to so many business owners during the pandemic, that many business owners had never taken on any debt for their businesses. Borrowing money to manage their business was a new, and often, unwelcomed concept for them. 

We argue that had business owners, like the person in this example cited above, made better quality, strategic decisions for their business, they would have fared better in so many ways, not only by having access to the PPP loan.

We also encountered so many businesses with tax returns that zapped all their revenue with mountains of expenses, all with a view towards lowering net income and ultimately paying a lower income tax bill. 

However, that lower net income could harm the business when trying to obtain financing because lenders often determine the maximum loan amount based on the net income.

We digress.  Again, was it a “bad thing” to have taken a COVID-19 EIDL? In our humble, professional opinion, NO, not at all.

The program has some basic features that make this financing package very attractive indeed.

First, is the low-interest rate. As a for-profit business during the pandemic, the interest rate is 3.75%. For non-profits, the rate is 2.75%. Even at the time of the pandemic, those rates were far below market rates for business financing. Even more so today with the recent increases in interest rates.

Next, the loan is a fixed-rate loan. The rate…and the payment…never change!  This is unusual in commercial financing because many business loans feature a variable rate feature.

The SBA’s COVID-19 EIDL is a 30-year loan.  With the combination of low-interest rates and extremely long-term (most commercial loans are substantially lesser terms of repayment period), the money is, as one of our colleagues and financial services professionals recently said, “free money!”

But wait, there’s more.

There’s no prepayment penalty. If a business owner truly despises the idea of carrying debt on the books, they can create an aggressive repayment plan to pay off the 30-year loan earlier with no penalty. Again, unusual! 

Many commercial lenders charge a penalty for paying off their loans early, and those penalties can be hefty.

Because the loan is a debt for the business, in most all cases, the interest is going to be tax deductible against business income. That lowers the overall income tax bill every year. NOTE: confirm with your tax professional if this is true for your business

Therefore, if do the math: 

  • Low-interest rate
  • Long-term repayment period
  • Tax deductible interest

It probably does work out to be, quite literally, FREE money

We encourage you to consider this before you rail against the fact that your business was “forced into” taking on this burden of debt.  In fact, we don’t think it’s a burden at all for other reasons besides the litany of amazingness we’ve outlined so far.

If your business faces challenges making the monthly payments due to economic conditions, you can request a hardship accommodation to lower the monthly payment by as much as 90% (to a minimum of $25.00) for a six-month period! This is an incredible benefit of the program. 

We don’t know of commercial lenders offering anything even close to this feature of the SBA EIDL. And, yes, you can request an extension of the six-month period.  

Once cashflow is back on its feet, if you experience difficulties again in the future, at any time during the 30-year term of the loan, you can request another hardship accommodation!

There is one other “intangible” benefit that so many people avoid thinking about or talking about.  

During the pandemic, whether your business was on lockdown restrictions, or experiencing pain due the depleted economy, where folks may not have been buying your goods or services, or you couldn’t access important components in the supply chain to create your product or service, you probably experienced a severe downturn in revenue. 

We know this isn’t true for everyone, but it is true for many small businesses. So much so that, since it was the only true business-saving benefit at the time, the SBA’s COVID-19 EIDL may very well have saved your business!  

If no other feature of this program has value to you, certainly this single intangible benefit must. We encourage you to take the time to do the math on what you lost compared to how the funds saved your business.

At the time of this writing, we’re encountering hundreds of small business owners having difficulty with the SBA’s COVID-19 EIDL. From challenges in their own business to find revenue, to challenges of making payments on the loan, and other considerations as well. 

We see a lot of complaints about this program. And we also see a lot of folks trying to gain information on how to avoid repaying the loan. As a result, in place of embracing the good things about the program, we see business owners, such as the person who inspired this blog, complaining about how they were “forced into” taking the loan, or complaining about how student loans are being forgiven but not these loans, and on and on.

Focus on the positive, as they say. Use those features as a basis to feel more encouraged about how the program helped you, use those features to help you cease complaining, and instead, find positive ways to focus on the problems at hand that are causing you distress in your business.

Once you do, you might find that your business improves because you’re paying attention to the core issues causing problems and striving to find solutions to those problems. This leads to thriving in your business instead of simply “surviving.”

If you want expert guidance on your COVID-19 EIDL, our Post-Closing Blueprint is the solution you need!  We cover every aspect of this program from your responsibilities to restrictions on your business to problem-solving advice, even a chapter dedicated to “How to Speak to the SBA!

The Problem with Crowdsourced Knowledge

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And it’s going to hurt. A lot.

17 Q&As from Our YouTube Channel

From the very beginning of the pandemic, Linda Rey and I set out to provide thoughtful, truthful, and accurate information to struggling Small Business Owners.  Literally, on March 18, 2020, we discussed how scammers, sharks, bad bloggers, and click-baiters, would emerge from the slimy depths of the internet to give bad information, poor advice, and misleading directions.

We’ve been answering questions ever since. During the pandemic, while we processed hundreds of EIDL applications for a total of $70M in approved funding, we answered questions on free phone calls, email inquiries, and our live YouTube broadcasts.

We’re passionate about Small Business and we want to do our small part to demonstrate our commitment to their success. Here’s a sampling of recent comments and questions we’ve received in response to a variety of our YouTube videos.

Q: The only choice, it seems, is to bk the loan if you truly can’t pay. I’d say ignoring sounds like a bad idea. Many of these youtubers have people thinking forgiveness is coming. One was cheering because he heard people saying loans were being charged off. He has no idea that’s not a good thing, yet he pumped that nonsense.

Our Response:

The Federal government has a long memory.” That’s why ignoring your COVID-19 EIDL is a BAD idea!

Even if you’re making your payments, you might be inadvertently ignoring simple basics to comply with the terms of the Loan Agreement you signed. Things like submitting annual financial statements or notifying SBA of changes to your business. Failing to comply is literally considered a DEFAULT by SBA in the Loan Agreement!!!!

Our Post-Closing EIDL Blueprint has all the info you need to remain compliant and NOT IGNORE the COVID-19 EIDL!

As for filing bankruptcy: this is another one of those topics tossed around carelessly by the pseudo-experts. While filing bankruptcy could potentially discharge the debt, that means you may have to ALSO file a personal bankruptcy. AND THAT MEANS starting all over with your credit. Or, even worse, having to include your other personal assets and liabilities in your personal BK just because you listened to some fool pretending to give expert advice!

There are other ways to manage a challenge with payments. Our Post-Closing EIDL Blueprint discusses remediation in depth.

Q: I’m closing my small business down due to health reasons. There’s no personal guarantee. Am I personally affected?

Our Response:

Trevor and I are truly sorry to hear about your having to close your business! We have seen so many small business owners suffering during these uncertain economic times.
You should be aware that, even absent a personal guarantee, according to the SBA’s Loan Authorization and Agreement (LAA), you may still have a personal liability for a defaulted loan. Meaning, SBA could potentially come after you for repayment of the debt. This is one of those murky areas where SBA’s poor communications fails to provide clarity.

If a business has a COVID-19 EIDL and is closing down, you must contact SBA, whether or not there’s a personal guarantee. SBA has a process for every situation and challenge, and closing a business is no different.

Q: You need to go back and research personal property. It clear states that you guaranteed the loan . With your personal assets. So that’s what my attorney’s said and my CPA if the loan is over 200 thousand

Our Response: 

1. We created our Post-Closing Blueprint to delve deeper into complicated concepts like this.  If you purchase the guide today, you will receive free updates through December 2024. We’re updating the guide occasionally due to the changing landscape of the COVID-19 EIDL requirements.  In our recent experience, SBA is literally changing the rules on the LAA, and, we know that internally they are still working out procedures for the new challenges facing the COVID-19 EIDL Borrowers, including defaulting loans, hardship accommodations, and the concepts of personal guarantee and personal liability.

2. SBA’s communications for this complicated topic are terrible. As with so much about the SBA program, it is nearly impossible to get clear guidance on a challenge or an answer to a question.  Your Attorney and your CPA are reading this one way, and I’m reading it in a different way because of my background as a Loan Officer.

The other element to your comments is that it is difficult to properly explain these complicated concepts in our videos. We do our best, but our Post-Closing Blueprint provides a more comprehensive discussion on these topics.

Our intention with our guide is to provide background to help the Small Business Owner come to an understanding of complicated SBA concepts instead of solely relying on a “pat” answer to a complicated question posed to an attorney or CPA, which is, IMHO, what happened in this case.

Our guide gives you all the information and tools you need to manage your COVID-19 EIDL. We made our best effort to untangle the complications of SBA’s confusing communications.

Q: ⁠what if you have less than 20% ownership but also have a personal guarantee w loan over 200,000?

Our Response: 

We define and explain the personal guarantee in great depth in our expert guidebook “Post-Closing Blueprint” but a short answer is this: personal guarantee means the guarantor(s) (business owner(s) with 20% or greater ownership interest) will take over the responsibility to repay the loan in the event the business entity cannot make payments.  The assets of the business owners are not considered collateral for the purpose of the EIDL, but those personal assets can be seized in legal proceedings that result in a judgment.

Click to Watch Video Where we Answer This Question
Click to Watch Video Where we Answer This Question

Q: Thank you for your response. However, I do know of a loan over $200,000 with (4) personal guarantees. None of the members personally own more than 20% but collectively own over 51% of the company. Each name is and was included in the loan and it was approved. Was this a mistake to have the loan issued in the first place? Are the members liable as a collection even though they don’t personally own more than 20%. Thanks Again guys love your videos.

Our Response: 

I often saw where an SBA Loan Officer would request a “list” of all owners with less than 20% ownership and require that all ownership percentages total out to 100%.  But the “list” did not require SSNs or similar personal information, only a full name and percentage of ownership.  The fact that a person with <20% has their name on a “list” with an EIDL application does not mean they are on the loan.

If they were required to sign the EIDL LAA, that’s a whole other story, and likely the application was prepared incorrectly.  If so, SBA probably didn’t question it as so many of those early applications went through an automated process.

Q: Would the same apply to a sole prop business?

Our Response:

It’s not unusual for Small Business Owners with COVID-19 EIDLs to express confusion and concern about various requirements and restrictions imposed by this SBA program.

That’s why we created our comprehensive expert guidebook “Post-Closing Blueprint” as your single source “go-to” reference guide before you interact with the SBA.  We urge Small Business Owners to purchase the guide now because the EIDL is a 30-year loan and many questions and issues will come up.

If a Sole Proprietor has the equipment they use for the business enterprise, then the equipment can be considered collateral.

Click to Watch Video Where we Answer This Question

Other “intangible” assets such as Accounts Receivables, payments due on contracts, etc., are considered collateral. Our guidebook delves into the definition of collateral and business assets in detail.

Click to Watch Video Where we Answer This Question

Q: Any chance they may extend the 10% hardship payment longer than 1 year?

Our Response:

The SBA’s hardship accommodation is actually six months, not one year.  And, as per the SBA’s comments on their website, at their discretion, SBA may extend a hardship accommodation an additional six months.

In fact, the EIDL program generally allows for SBA to provide multiple hardship accommodations throughout the life of the 30-year loan!

As you may know from watching our YouTube videos, we only focus on facts, and we tend to demur from pure speculation. We don’t want to disappoint, that’s why we don’t speculate and why we prefer to focus on facts.

That’s why we stridently urge Small Business Owners to aggressively communicate with their U.S. Senators and Congresspeople to implore the federal government to both reauthorize the SBA and to enhance remediation for Small Business Owners with the COVID-19 EIDLs.

Congress controls the process!  Let them know how you feel and about the help you need to continue your recovery from the pandemic!

Q: The issue…for me at least…the economy is still crap. And my business has not recovered 100% so my income has declined and cost of living has increased. I really fear I will have to BK at some point.

Our Response:

We’re always disappointed to hear how Small Business Owners continue to struggle in this post-pandemic era.

We believe the U.S. Congress can certainly do more to relieve the suffering by providing some guidance to SBA to either increase deferments for the COVID-19 EIDLs, or to lower the interest rate, or, heavens-to-Betsy, offer FORGIVENESS!!!!

In the meantime, with our experience over decades in business ourselves, through all kinds of economic “storms” including recessions and the global mortgage meltdown, maybe we can offer you some kind and positive advice?

First, Trevor, a retired Loan Officer and “student of economic history” believes the economy is doing much better than most folks believe!  Yes, he knows that’s an unusual take, but it’s based on actual economic metrics, and ignores all those confusing media messages (you know, “There’s a recession coming!” “No recession!” “Is it recession yet?” and blah-blah-blah).

Second, from our own experiences, we believe that, when the going gets tough, the tough get going by focusing on ONE THING: Marketing!  We have so often seen how small businesses suffer at the hands of their own failures to increase marketing efforts.  In our opinion, the best way to overcome most business challenges is to get out there and try to find more customers.  The only way to do that is to invest 85% of your time and effort (and money) on MARKETING.

We can personally attest to how our increased marketing efforts have helped us to build our new business initiative after the SBA’s COVID-19 program ended, effectively “putting us out of business” in May 2022.

Marketing works! We truly hope you’ll find a way to overcome the business challenges facing your small business and that filing for bankruptcy will only be a distant and unrealized concept!

Q: I feel its vital folks out there get a sense for what is really happened to small businesses and what heartache and hardship we were put through. I mean the sba can cancel the interest and allow businesses to pay back the loan at hardship accommodation mode for 5 years. This is going to take a long time for mom and pop places to recover from. And county level officials need to be proactive and hold urgency when small businesses get their licenses taken away. We cant wait for legislation for next year for this to help. We need help at real time! Both parties need to mature up.

Our Response:

SBA cannot cancel interest and is not currently allowing hardship accommodations for 5 years.

We discuss SBA’s hardship accommodation and other loan remediation policies, including providing strategies for Small Business Owners to negotiate and communicate with SBA in our comprehensive Post-Closing Blueprint guidebook.

We stridently urge businesses with the COVID-19 EIDL to purchase our guide as their “GO-TO” reference before interacting with the SBA.

Q: Does the SBA automatically put a lien on you assets if the loan amount is 50k ? If I am current would their be a lien on my property?

Our Response:

We answer this question in detail in our Post-Closing Blueprint.  We encourage business owners with a COVID-19 EIDL to purchase our guide as the “GO-TO” reference before interacting with SBA for any questions or concerns about the EIDL.

The short answer: SBA put a UCC lien against the business assets for a COVID-19 EIDL if the loan amount was greater than $25,000.00.

There is no lien against your personal assets.

The lien is there from the beginning of getting the loan; they don’t put additional liens later on.

Q: They accused me of fraud six ways from Sunday, they denied my loan by accusing me of fraud, isn’t that negligence and character defamation? They did the same to hundreds of legitimate SBOs, so I’m wondering why we’re not banding together and filing a class action…I was shocked at how focused they were on fraud, against all logic and common sense, and they refused to hear me out or entertain the idea that they were wrong. Maybe the reason they’re making such a big deal about the alleged d fraud is because they finally realized they were actually negligent AND defamed innocent people’s characters, but don’t want to get sued…?

Our Response:

Call SBA Disaster Customer Service at 1-833-853-5638. Explain briefly the history of your application, focusing on these four key elements:

ONE: You Signed the Loan Agreement for a COVID-19 EIDL (You should have this in front of you on the call with the SBA Disaster Loan number located in the upper left hand corner of the agreement)

TWO: You never received the funds
THREE: You were told your file was flagged for “fraudulent activity”
FOUR: You want to confirm that you do NOT have a COVID-19 EIDL loan with SBA that needs to be repaid.

The SBA representative will transfer to the servicing center if a loan was funded. You will need to repeat your story again, but your goal is to ensure you have NO DEBT for the COVID-19 EIDL program.

Please note that we offer a one-hour phone consultation where Trevor will call SBA with you on the line if you prefer to have our expert professional assistance. You can schedule the paid consultation call here.

Q: ….so I get it…that’s why I continue to make monthly payments. Yet I wonder if defaults reach a serious level what in your opinion will Congress or the SBA attempt to do to prevent their defaults from snow balling well beyond any foreseeable limits? Obviously the US government isn’t benevolent unless you are a too big to jail bank but are the bureaucrats that heartless?

Our Response:

We literally have no idea how SBA and/or Congress will react to a high number of COVID-19 EIDL defaults. There’s no true precedent, except for maybe Hurricane Katrina where a portion of the SBA disaster loans were ultimately forgiven thanks to a strenuous campaign by political representatives from Louisiana.

Currently, the mood in the Senate, at least, led by Senator Joni Ernst, seems to be to demand that SBA aggressively enforce collections on ALL COVID-19 EIDLs.  There does not seem to be a mood to accommodate and support Small Business Owners, the so-called “backbone of the American economy.”

The best course of action we can recommend is this:
1: Begin a constant communications campaign with your United States Senators and your local Congressional representative.

2: Demand that Congress create a response to these defaulted loans and future defaulting loans to help business owners emerge as undamaged as possible, including forgiveness, loan remediation to include longer hardship accommodation periods (currently six months), and potentially reducing the interest rate on the COVID-19 EIDLs.

3: Demand that Congress reauthorize the SBA and EXPAND the SBA with funding and expanded Congressional guidance.

Q: I have an eidl loan that was $50,000. I am a sole prop, i do not have or own any business assets, did not put up any collaterall , i rent an apt, finance my car and basically have a dead seasonal service based self employment type ” business”. I cannot pay this loan back – what will happen?

Our Response:

We’re so very sorry to hear about your situation!  So many small businesses continue to suffer due to the economic ravages of the pandemic.

We know that SBA is wrangling internally with issues about defaulting COVID-19 EIDL loans. Their procedures are evolving frequently.

When all is said and done, even without collateral and without a personal guarantee, a defaulted federal debt is a serious problem. We address this issue in our comprehensive expert guide, the Post-Closing Blueprint.

We’re hoping you and other folks in your situation will rely on our guide as the primary reference source BEFORE you interact with the SBA to try to resolve the defaulted loan situation.

One word of caution: a lot of the “urban mythology” out there would have folks believing “the SBA is never coming after me and my little business” leading them to simply ignore the debt obligation.   We believe this is a tragically horrible strategy.  The federal government has a long memory and you don’t want to be on the receiving end of their collection efforts, ever.

Especially as several US Senators are urgently pressing the SBA to aggressively enforce collection on these debts, even those loans for less than $100,000!

Don’t ignore the debt; contact the SBA to work out a resolution. Use our guidebook to prepare you before you contact the SBA. We wish you all the very best in this terrible situation!

Q: a general question about ERC and worry about being scammed

Our Response:

In our experience, the IRS sends the refundable tax credit to THE BUSINESS, not to the ERC consultant. Hopefully, you did not give the consultant access to your bank account.  

The ERC consultant on our Referral Partners team gets paid by the Client AFTER the Client receives the IRS refund and the consultant has to trust the Client to pay the consultant fee.  

The IRS scam warning focuses on consultants who take fees upfront and/or who improperly process ERC requests, including with incorrect documentation or for ineligible businesses. Get our FREE ERC Guide.

We created a FREE ERC guide. Click on image to download.

Q: So what are my options if I’m not able to pay back my loan? I’m sure there are thousands of people out there that cannot pay these loans back

Our Response:

We’re sorry you’re experiencing difficulties with repayment of the COVID-19 EIDL.  So many Small Businesses suffered through the pandemic and subsequent economic difficulties.

We’re not sure what “…not able to pay back my loan” means, whether your business failed, or you’re still in business and cannot afford to make any payments at all, or if you need temporary assistance with a reduced payment until revenue improves.

We tried to anticipate all three of these situations and more in our Post-Closing Blueprint where we provide detailed guidance to answer questions like yours.  

We assembled our expert comprehensive guidebook based on our experience with SBA processing, our experience as financial services professionals, and over the past 9 months, speaking with Small Business Owners and the SBA to get the right answers to questions like these.

Our guidebook gives you strategic solutions including WHO and HOW to call at SBA, SBA forms you might need, TEMPLATES for submitting requests to SBA, and Step-By-Step instructions to help you resolve challenges with the SBA loan program.

Keep in mind that, while a business may be unable to pay these COVID-19 EIDLs, these are legal debts and SBA will require repayment in one way or another, either now or in the future through debt collection practices.  In other words, these loans are not simply a matter of “walking away.” Hope that helps!

Q: I am in the trucking business and with everything and the stimulus that I borrowed, it is going badly for me and I cannot pay the full monthly payment, if this economy does not improve, then they can do what they want with me and what I have been able to achieve so far

Our Response:

We are sorry to hear your business is still struggling.  The harsh realities of the pandemic combined with the following economic issues such as supply chain and inflation is certainly impacting millions of Small Business Owners.

SBA will allow you to pay a reduced payment of as little as 10% of the monthly payment (must be a minimum of $25.00) for a six-month period.  You can request this hardship accommodation on your MySBA portal.

If the issues are more urgent, then we recommend using our Post-Closing Blueprint to guide you on how to call the SBA, who to speak to, and the SBA’s forms and process.

5 FAQs about the SBA EIDL Loan

square thumbnail to promote a live youtube show. Linda Rey and trevor are leaning on each other and the caption reads: EIDL UPDATE: COMMON SENSE or Chaos.

Click to download this free guide.
Click to download this free guide.

There are five sections in this post that address various issues people inquire about with us on an almost daily basis.

  1. Our Post-Closing EIDL Blueprint
  2. COVID-19 EIDLs are not Forgivable
  3. Fake Forgiveness Freaks
  4. IRS Form 982
  5. Our consulting services to assist COVID-19 EIDL Borrowers 

Our Post-Closing EIDL Blueprint is our comprehensive, expert guide that outlines all SBA EIDL obligations, restrictions and questions that may come up with the COVID-19 EIDL.

One of the FAQs we get on an almost daily basis is when a Borrower is having difficulties making payments. We address this in our Blueprint.

All the topics covered, in our Blueprint, can be found in the table of contents including “Make A Payment Toward Your EIDL.” You can then click through to “Hardship Accommodation.”

The navigation link takes you directly to the section on how to request lower payments.

COVID-19 EIDLs are not Forgivable

If you call SBA’s customer service number, as Trevor did this morning, the initial menu prompt states the loans are NOT Forgivable.

You can request a reduced payment by as much as 90% (see the section in our guide about “Hardship Accommodation”) for six months. It may be possible to request additional extensions (subject to SBA approval.)

A business owner cannot pause payments.





SBA’s position on difficulties repaying the COVID-19 EIDLs is this: They expect Borrowers to pay, no matter the circumstances. This includes the ever-so-drastic event of a business partner embezzling the disbursed funds, which happened to one of our clients.

You can learn more here about how we found out that our client’s “partner” was indicted today.

Fake Forgiveness Freaks

We know there is lots and lots of chatter on the internet and elsewhere about these loans being Forgivable, and apparently all kinds of misinformation from alleged “experts” on how to manipulate the SBA system to make the loan Forgivable.

These “fake experts” have folks chasing fantasies to get their loans Forgiven, including a new class of scammers offering to negotiate an “Offer In Compromise” with SBA–for a FEE of course.

SBA’s internal procedures are still evolving. That’s why we provide FREE UPDATES to our Post-Closing Blueprint through December 2024 so you have the latest and most accurate information about the program.

IRS Form 982

This form does not pertain to Forgiveness of an SBA COVID-19 EIDL. This form is used to reduce the tax liability when a person or business receives a “discharge” of indebtedness (such as settling a collection account for less than the full balance because the amount of settled reduction is considered taxable income disclosed on IRS Form 1099-C).

From the IRS website: “Form 982 is used to determine, under certain circumstances described in section 108, the amount of discharged indebtedness that can be excluded from gross income.

Our latest information, directly from reputable sources at SBA, is this: If a COVID-19 EIDL defaults, SBA will attempt to recover the debt, but they will ultimately transfer the defaulted debt to the IRS for collection. IRS then can collect through liens, wage and benefits garnishments, and tax refund seizures.

Our Consulting Services

We offer consulting services to assist businesses in navigating a variety of questions and challenges with their COVID-19 EIDLs. We have been assisting with these services since September of last year.

If a U.S.-based business is in need of our services to assist with their COVID-19 EIDL, we will prepare and send a consulting proposal that outlines the objectives, scope of work, estimated time to complete, and cost.  


NOTE: We also offer consulting services for Natural Disaster loans and general business activities. Click HERE for natural disaster consulting. 


Aside from our specific expertise with the program and familiarity with required procedures and forms, we’ve come to learn that many CPAs and attorneys are providing incorrect information to their clients about this program. They may mean well, but their ignorance of actual SBA protocols can be very harmful, in our opinion, to the business due to the misinformation they provide.

A CPA or an attorney may have general knowledge of the COVID-19 EIDL program. With good intentions to help their clients, we’ve seen how their answers are attempting to be helpful, but often miss the mark with specifics about some of the complicated challenges and SBA communications of this program.

Pretend you inherited your Great Uncle’s 1963 Jaguar E-Type.
Trevor at Lime Rock Park, CT where Paul Newman Used to Race
It needs maintenance, or maybe a repair. You take it to your local mechanic, the one who has changed the oil and rotated the tires on your 2001 Honda for the past 22 years.
With good intentions, your mechanic may attempt to help you with maintenance or repairs on the classic Jaguar.  
But a mechanic who specializes in Jaguars–especially old ones–is probably a better choice, don’t you think?
Does that help you better understand the difference between your CPA/Attorney and Aurora Consulting?
We processed hundreds of EIDL files during the pandemic to obtain $70M in approved funding. We gave away free advice about the program to thousands of Small Business Owners. We spoke to hundreds of SBA Agents.
Since September 2022, we’ve assisted dozens of Clients and others with questions and problems with their COVID-19 EIDLs.
  • How many COVID-19 EIDLs did your CPA/Attorney process?
  • How many SBA Agents have they spoken to?
  • Did they read the SBA’s EIDL SOP (all versions)?
Where are you going to take that Jaguar now?

Can SBA Forgive a COVID-19 EIDL?

No, but Congress can because they did it before.

  • Small Business Owners with COVID-19 EIDLs want their loans Forgiven
  • Facts about the Forgiveness of SBA EIDL loans
  • Congress is Focusing on Fraud, Not Forgiveness
  • Action Plan: What You Can Do
  • You Received a COVID-19 EIDL and You Can’t Pay It Back
  • Resources & References

Business Owners want their COVID-19 EIDLs Forgiven

The question most often asked by Small Business Owners who took an SBA COVID-19 EIDL during the pandemic is this: Why doesn’t SBA simply FORGIVE the COVID-19 EIDL?

The answer is simple: the United States Small Business Administration (SBA) does not have the regulatory authority to forgive Federal debt.  Only one institution can do that, the United States Congress.

In our internet travels we often see frustrated and angry Small Business Owners who want to have their COVID-19 EIDLs forgiven.  In search of answers, these folks often turn to infamous “click-bait” sharks who provide false and inaccurate information, mostly to get people’s hopes up that SBA will forgive these loans.  

We have seen occasionally where an online discussion will include a comment from someone saying something like, “SBA forgave Hurricane Katrina EIDLS!”  Sadly, comments like this add fuel to the false hopes fire because this is actually TRUE.  But we need to look further into how SBA was able to forgive the Hurricane Katrina EIDLS because that natural disaster impacted the future of SBA’s EIDL program in positive and negative ways.

We don’t say that the COVID-19 EIDLs should not be forgiven. 

What we have discussed time and again is the fact that the program does not currently offer forgiveness for these loans. We agree that many small business owners took on this debt “under duress.” Unfortunately, this program exists for exactly the reason that it was used by those small business owners: to assist with lost revenue as a result of a disaster. In this case, the disaster was the COVID-19 pandemic.

We set out in March 2020 to communicate factually correct information for small business owners about federal programs. Having gone through the mortgage meltdown of 2008 through 2010, Trevor knew the amount of misinformation put out by bad players on the Internet would be legendary and would confuse small business owners.

Like everyone else, we did not know where this pandemic was headed, and what the results would be on the economy of the United States, or on the livelihoods of millions of small business owners. But we knew one thing for certain, as Trevor learned during the mortgage meltdown: people would turn to the Internet, they would turn to communities online, they would seek out through desperation accurate information to help them manage the crisis.

We adhere to our original commitment to this day: provide factually accurate information that business owners can rely on for understanding the program, and in their decision-making processes to continue to maintain and grow their businesses.

We believe this commitment proves that we certainly do not trivialize any aspect of the small business owners’ struggle during and after the pandemic. But we will not relent from our consistent messaging that, at the moment, the COVID-19 EIDL loans are NOT FORGIVABLE.  We maintain this position, especially considering the volumes of misinformation here on YouTube and elsewhere on the Internet perpetrated by people who truly want to take advantage of the small business owners’ desperation. 

These unsavory players consistently provide inaccurate and often false information about forgiveness, trampling on the desperation and hopes of small business owners that the loan will be forgiven. These people provide this inaccurate information for one purpose: their own self-interested need to build an audience and earn money off the backs of unhappy small business owners.

If you look at the number of subscribers we have and compare those to many of the other channels, you will see our numbers are substantially smaller. We get that. We understand that not everybody wants to embrace the factually accurate messaging that we present. And we’re OK with that. Just as we were during the COVID pandemic when we provided similarly accurate information to help small business owners navigate the nightmare process of the COVID-19 EIDL program. We gave away accurate truthful and free information day in and day out. We did it here on YouTube, we did it on our blog, and we did it with free consultation phone calls. 

Circling back to the concept of forgiveness, we reiterate our consistent messaging that, if a small business owner truly wants to receive forgiveness for their COVID-19 E IDL, then they should implement aggressive letter writing, phone calls, social media, and texting campaign to their political representatives.

Only the United States Congress has the authority to make some or all these loans forgivable.

We recently researched the SBA’s natural disaster loan program for small business owners in Louisiana in the aftermath of the devastation caused by Hurricane Katrina. We discovered that Congressional legislation passed in 2007 and 2014, allowed $391M of Hurricane Katrina disaster loans to be written off and forgiven.

Facts about the Forgiveness of SBA EIDL loans

Congress controls the purse strings of the United States Government.  Congress directs the government how much money they can spend (see the recent debt-ceiling debacle), and how they can spend it. Congress enacts legislation to provide money for the government to spend, such as the CARES Act in 2020 which provided for COVID-19-related spending, including the SBA’s Economic Injury Disaster Loan (EIDL) program.

Who created the EIDL and who created the SBA? CONGRESS did!

The SBA EIDL was created in 1953 along with the creation of the Small Business Administration. The EIDL was created to assist Small Businesses to recover from a natural disaster. 

Hurricane Katrina Changed the EIDL Program.

SBA’s mandate from Congress to provide loans for natural disaster areas had a statutory limit of $5M per “jurisdiction.” 

The catastrophe of Hurricane Katrina and the damage caused in Louisiana prompted the representatives, Senators, and Congresspeople, to request that Congress lift the SBA’s statutory disaster loan limit of $5M per jurisdiction. These representatives argued that the devastation was so vast that much more disaster funding was needed.

In 2005, in response to Hurricane Katrina, The Republican-controlled Congress and White House agreed to lift the cap. That was the good news.  The bad news was the removal of the cap came with a requirement: SBA disaster loans could not be forgiven.  

This requirement changed the entire EIDL program to remove forgiveness on future EIDLs, not only Hurricane Katrina loans.

Sen. Mary Landrieu, D-Louisiana, and Sen. Carl Levin, D-Mich., among others, argued that this ban on loan forgiveness, without subsequent congressional action, was discriminatory.

“We have never imposed this restriction that is in this bill on any community in this country,” Levin said. “We have lent money to Rexburg, Idaho; we have lent money to Johnstown, Pa., we have lent money to Clifton, Az., we have lent money to Albion Borough, Pa; we have lent money to Vassar, Mich., in my home state.  But now we are telling the victims of the worst disaster we have had in this country that the Stafford Act provisions, which, under certain circumstances, could permit the forgiveness of a loan, will not be available to them.”

No matter the entreaties of the Louisiana representatives, the Republicans in Congress held firm to the prohibition on SBA disaster loan forgiveness.

Ultimately, the Louisiana representatives were partly-successful in their request: Congressional legislation passed in 2007 and 2014 allowed $391M of disaster loans to be written off and forgiven.

But that wasn’t the total amount of loans.

It is important to note that not all SBA disaster loans were forgiven.  Total loans for Gulf Coast hurricanes Katrina, Rita and Wilma amounted to $6.3B.  With only $391M forgiven, a large dollar volume of disaster loans remains due and payable to this day.

In 2021, New Orleans District “D” Councilmember Jared C. Brossett sent a letter to President Joseph R. Biden requesting further relief for disaster loans in the form of forgiveness.

For the SBA’s COVID-19 EIDL program to be forgiven, Congressional legislation will need to be proposed and passed.  

Congress is Focused on Fraud, Not Forgiveness

The Small Business Administration, like other Federal Agencies, features a special Office of Inspector General whose duties include auditing the agency to protect taxpayer money, including where criminal and fraudulent activity has impacted an Agency or program.

The SBA’s OIG has made substantial media pronouncements about the dollar value of fraud perpetrated on the SBA’s various COVID-19 programs, including the EIDL. *See SBA OIG report attached in our Fraud vs. Forgiveness download by completing the form below.

Sadly, when compared to the total dollar amount provided to Small Businesses, it is our opinion that OIG’s focus on what will probably be a small percentage of fraud relative to the total funding is a lot of noise about an important, but secondary issue. 

The primary issue facing Small Business Owners is recovery from the pandemic.  
Small Business Owners, focusing on recovery, may be struggling with making payments towards a debt obligation they never wanted in the first place, but had literally no choice but to receive to survive the pandemic.

The SBA’s OIG reporting to Congress is creating, in our opinion, an unreasonable focus on the fraud that occurred. This focus is a distraction from the attention and assistance the Small Business Owners really need: helping them continue pandemic recovery and providing better repayment options.

There are also calls from Legislators for the SBA to enforce repayment of the COVID-19 EIDLs. 

Due to recent complaints from several United States Senators who wrote letters to the SBA Administration that SBA should enforce collection on defaulted COVID-19 EIDLs and PPP loans, there does not currently seem to be a taste in Washington D.C. to allow for forgiveness legislation to proceed.

*See letter to SBA from Senator Joni Ernst attached in our Free Download when you complete the form to the left.

You Received a COVID-19 EIDL Loan and You Can’t Pay It Back: What To DO?

We’re so very sorry when we hear about so many small businesses continuing to suffer due to the economic ravages of the COVID-19 pandemic.  We often hear from business owners who received an SBA COVID-19 Economic Injury Disaster Loan (EIDL) and now find they cannot repay the loan.  

Sometimes the challenges are simply a matter of cash flow: the business can keep itself afloat, but making the EIDL monthly payment is an additional burden on the income of the business.  Other times we’ve learned the business is hanging on by a thread—still open and operating but doomed to fail soon.  We also hear the terrible stories of businesses that have failed and closed altogether.

We are passionate about Small Business. We’re committed to supporting Small Businesses, so we’re extra level miserable when we hear of the troubles so many folks are facing to keep their businesses alive.

The pressing issue is the repayment of the COVID-19 EIDL: What to DO?

Generally speaking, the Small Business Administration holds a lien against the small business for any EIDL loan greater than $25,000.00.  Should the business fail and default on the repayment of the loan, the business assets become the property of the SBA to dispose of as needed for the purpose of recouping the remaining balance of the loan.

For loans greater than $200,000.00, the business owner(s) have personally guaranteed repayment. Thus, in the event of the loan defaulting due to inability to repay, and after disposing of the business assets to cover money owed, should there remain a balance of money owed, the SBA has the right to obtain a “deficiency judgment” against the business owner(s). That judgment can cause liens to be placed against personal assets, or, in the extreme, seizure of personal assets, garnishment of wages, and withholding of federal benefits, tax refunds, even Social Security benefits payments.

This is serious business. We urge all small businesses with a COVID-19 EIDL to purchase our comprehensive expert guidebook “Post-Closing Blueprint” to understand their responsibilities and to follow our recommended strategies should the loan repayment become difficult to manage. We’re hoping folks will rely on our guide as the primary reference source BEFORE they interact with the SBA to try to resolve the defaulted loan situation.

Based on our recent interactions with SBA as advocates for our clients, we know that SBA is wrangling internally with issues about defaulting COVID-19 EIDL loans. Their procedures are evolving frequently. SBA is developing a response to the ongoing problem of borrowers’ inability to repay their loans.

When all is said and done, even without collateral and without a personal guarantee, a defaulted federal debt is a serious problem.

One word of caution: a lot of the “urban mythology” out there would have folks believing “the SBA is never coming after me and my little business” leading them to simply ignore the debt obligation.   We believe this is a tragically horrible strategy.  The federal government has a long memory, and you don’t want to be on the receiving end of their collection efforts, ever.

Especially as several US Senators are urgently pressing the SBA to aggressively enforce collection on these debts, even those loans for less than $100,000! 

And again, we reiterate to all small business owners in the United States who took a COVID-19 E IDL to save their business: contact your political representatives. Put the pressure on Washington DC to get these loans forgiven.

  • Nine years after Katrina, federal government has forgiven $391 million worth of federal disaster loans. NOLA.com
  •  SBA OIG Report on Hurricane Disaster Loans for Gulf Coast hurricanes. 
  • NEW ORLEANS – District “D” Councilmember Jared C. Brossett Letter to President Biden
  • The Stafford Act: The Stafford Act Public Assistance program provides disaster assistance to States, tribes, local governments, and certain private nonprofit organizations.  FEMA Download
  • Blog written by TREVOR CURRAN. No AI was used in this publication.

#EIDL #COVIDEIDL #COVID19 #SBACOVIDEIDL #SBALoan #HurricaneKatrina #DisasterLoan #EIDLForgiveness #Forgiveness @EIDLRepayment #SBAForgiveness #SBADisasterLoan #SBADisasterLoanForgiveness #SBAEIDLForgiveness #SBACOVID19EIDLForgiveness #DisasterLoanConsulting #DisasterLoanConsultant #NaturalDisaster #NaturalDisasterLoan #Hurricane #Tornado #Wildfire #Drought #Flooding 

3 Key Issues with the SBA Natural Disaster EIDL Loan

YouTube Playlist
YouTube Playlist

An article recently published by Louisville Public Media, shares how homeowners and business owners are working on their recovery from a natural disaster, notably, the Kentucky floods of July, 2022.  We learned so much about the SBA and its disaster loan program during COVID by assisting thousands of Small Business Owners.  There’s good news, and there’s bad news. We reflect on both.

We summarize several key points from the article to help you better understand three things about SBA natural disaster loans:

  1. SBA is the lending processing “infrastructure.” That’s why FEMA refers you to SBA for the loan. But, the lending process can be complicated, lengthy, confusing, and bureaucratically rigid.
  2. You must apply for the SBA natural disaster loan and receive a decision before you can request most other FEMA assistance.
  3. SBA sees its natural disaster loan mission as making your Small Business “100% whole to cover uninsured losses.”

One homeowner interviewed refused to accept an approved SBA loan because “The strings that are attached and all the things that go along with an SBA loan is quite extraordinary.”

An SBA public affairs specialist is quoted in the article saying, “Our job is to try to make someone whole as near as possible. We cover up to 100% of their uninsured losses.”

Our experience with SBA is this: while these SBA intentions are noble, SBA’s internal workings often present many obstacles to the goal of approval, notably with poor communications between SBA and applicants and with inconsistent underwriting standards applied by SBA staff.

Investigators from other governmental organizations have previously determined the FEMA-SBA process is overly complicated and poorly communicated. Many people in a disaster situation simply cannot understand why they must apply for a loan, nevertheless a loan through the Small Business Administration.

These same investigations uncovered the fact that many people “leave money on the table” by failing to apply for loans or turning down loan offers. Many others are frustrated by slow response times.

In our work during COVID-19, we often advised people to follow “Trevor’s Golden Rule: Always Apply.”   The SBA natural disaster loan can provide a much-needed lifeline to recovery at very low-interest rates.  And applicants do not need to accept the loan even when finally approved.

Small Business Owners should note that “FEMA does not offer grants to businesses. SBA loans are the primary federal resource available for…businesses…(damaged) in a disaster.

A researcher who is an Assistant Professor at a University, interviewed, provides the following feedback based on her research on how communities, including businesses, recover from disasters. Her research “shows that businesses whose owners receive SBA loans are more likely to survive after a disaster.”

A business owner interviewed in the article stated that she applied for an SBA natural disaster loan but was “declined…because of credit.”

We learned that SBA’s declinations for credit are misleading.  First, SBA’s own underwriting guidelines for Loan Officers state that an applicant for a natural disaster loan does not have to be denied due to credit.

Second, we know from experience that SBA loan officers often don’t know how to read a credit report, relying solely on the credit score, which is addressed in the underwriting guidelines as “not the only reason” for denying the application. SBA’s guidelines encourage their loan officers to delve deeper into credit history and ask questions about credit rather than rely solely on credit scores.  But we know from experience that SBA loan officers very often ignore these guidelines and base their application decisions solely on credit score.

thumbnail for the video about credit score Linda Rey and trevor sitting on chairs with curious facial expressionsTrevor has discussed credit scores extensively on our YouTube channel.  We have a playlist dedicated to credit score inquiries, low credit scores when applying for a loan and how to write a credit explanation letter. Watch this video on the myth of running credit and the common question about “hard vs. soft hits.”

Lastly, regarding credit, many applicants have identity protections including locked credit reports.  We have seen many, many times where SBA will decline an applicant for “credit” due solely to the reason that the credit report was locked and SBA could not access the report.  SBA representatives consistently fail to disclose this pertinent fact to applicants and SBA’s declination letter makes no mention of a locked credit report stating only that the application was declined “due to credit.”

We have stated repeatedly in our YouTube videos that you must request Reconsideration to fight when your SBA natural disaster application is declined.  This brings your application to a higher level of scrutiny that can get the negative decision overturned for a positive result in your favor: approval.

Our final observation on this excellent article from Louisville Public Media. Based on this quote from a disaster resource attorney who works with an organization that provides free legal assistance:  “…she tells clients who do qualify for an SBA loan to take it because not taking it may disqualify them from additional assistance and the other financial option will most likely be a personal or bank loan.  If a disaster survivor doesn’t use financial assistance, they might leave the area…”

During the pandemic, we assisted thousands of Small Business Owners with the SBA program.  We know the complaints and anxieties by Small Business Owners, about the program, are legendary.  But we also know that, without that assistance, so many more businesses would have failed due to the pandemic.  

That’s why we provide these YouTube videos and our expert advice: we know the value of these programs. That’s why we often say, “Stop complaining and start submitting!”  

  1. Get your SBA natural disaster application submitted.
  2. Follow up and respond in a timely manner with documents.
  3. Set your frustrations about SBA’s process aside; do the work.  

The benefit you receive on the other side is tremendous and will help your business recover from the natural disaster. 

You can visit our EIDL Natural Disaster Consulting service page where you can complete a survey if you’re interested in assistance through this complicated process.

How to Manage Distractions for Your SBA EIDL APPROVAL

Saturday afternoon, Trevor purchased a half gallon of 2% milk for his morning coffee. He then discovered the milk was bad. When he checked the date, he saw the container was already 8 days past its “sell-by” date when he purchased it, thus making today 10 days past due.

He returned to the market, grabbed another 2% half gallon only to discover that the date was also past due. Finally, he found one that’s good for another 8 days.

When Trevor went to the counter to tell the owner, he said, “I knew it. I should always stock the milk myself.  No matter how many times I tell them, they just don’t pay attention.

He was referring to the two young men, probably teenagers, who work part-time for him. We remembered they were there the Saturday when Trevor went to the counter to pay for the first, bad, half gallon of milk. They sat off to the side and neither one had the sense to get up, come to the counter and ring Trevor out. The owner was busy at the ice cream window scooping out some of his excellent local creamery ice cream.  Trevor had to wait to pay for him to finish with his ice cream customer.

When he told Trevor about the lads not ‘paying attention’ to their work, we were reminded of the teenager we hired to split firewood on our property. We told the owner, “When they’re working here, you have to take their phones away.” Trevor went on to describe his observations of the wood-splitter at our house: “His Mom drove him up to our driveway with the wood splitter on a trailer attached to her car.  Then, later, I saw him split two pieces of wood, then take his phone out of his pocket, spend five minutes messaging, then split two pieces of wood, then the phone would come out of the pocket, and so on.

Before you think we’re just old curmudgeons who disregard a teenagers’ work ethic, let’s describe some of the same behaviors we’ve discovered in our clients.

Thanks to COVID-19, our little financing practice morphed into assisting small business owners with the Federal Government’s disaster assistance from the U.S. Small Business Administration (SBA) known as Economic Injury Disaster Loans (EIDL). Working on an SBA loan application is, in the best of times, a daunting and complicated process. 

The paperwork is complicated and lengthy, and the bureaucracy is fraught with all kinds of systemic incompetence.  All of these features have been exponentially made worse by the overwhelming need for this program due to the pandemic.

Our clients run the gamut from “gig-worker” self-employed sole proprietors to owners of businesses that generate multi-millions in annual revenue; age ranges from 20-somethings to folks my age (60) and older.

Trevor was a mortgage loan officer for 30 years. He learned early on that the key to getting any loan application approved was paying attention to details, especially those that may appear to be inconsequential. He worked mostly on government mortgage loans in his career; which presented a solid preparation for working on these SBA government loans now. And the most important lesson, about those otherwise minor details, comes to bear every single day.

Most of our clients have applied for the SBA loan and have been declined. So our job is to review their documents and their applications and “fix” whatever was wrong that caused the declination in the first place. You may think these folks were all declined because they simply didn’t qualify; but that’s not how this program works, almost every applicant is eligible and qualified due to the fact the loan program is only about compensating the business for revenue lost due to the disaster—COVID-19.

We’ve discovered a terrifying aspect of our modern life: it seems everyone, of all ages, every generation, is distracted. Their distractions are causing real difficulty, personally and professionally. In almost every client file we work on, we see mistakes that range from their SBA application process to the mistakes made with their fundamental business documents or information.

Those mistakes, many of them fairly simple and functional, are causing these businesses to be delayed in getting an approved for vital this funding that, quite literally, will keep their business alive during the pandemic and beyond. When we discuss these errors with the clients, the responses too often point to that one disturbing word, again and again: distractions.

“I was in a hurry when I did the original application,” as an explanation why there are wild inaccuracies in their application when compared to their financial or other business documents.

Or, from the business owner who’s original business partner, absent from the business for ten years or more, recently walked into the bank and withdrew nearly $100,000 of the business’ money for himself because his name still appears on the business name and the bank account, even though our client doesn’t consider the man to be a partner at all.  Our client never took the time to visit his attorney and change the paperwork, or remove the partner’s name from the bank account. Why? Distracted with his other job, another business, his family, and, you name it.

That same local market owner had his problems with the SBA process too, notably, his inability to locate an important email from the SBA about his loan that we had submitted for him. We called him every few days to ask if he had received an email from SBA with his loan approval (all our other clients were receiving emails and I couldn’t figure out why he wasn’t). “No, nothing yet,” he’d say, to which we responded, “Did you check your SPAM folder?”

But he’s busy running a little country marketplace (with, apparently, useless employees who can’t even stack milk cartons with correct expiration dates), so it wasn’t until we got him on the phone late one afternoon when we knew the store would be quiet and we forced him to stop what he was doing and scroll through every single email, including SPAM.  And, there it was!  The SBA email from two months before, now long expired, with his loan approval.

Like the milk episode, this caused more work for us. His distractions of simply running his business kept him both from hiring competent employees (who were distracted in their own ways), training those employees, and taking the time necessary to attend to a vital funding that would dramatically have eased his economic suffering due to the COVID-19 pandemic lockdowns.

Trevor realized that he noticed this trend in the late years of his mortgage career, too. Folks who were requesting that Trevor’s bank lend them hundreds of thousands of dollars, were so distracted in their daily lives (they always had the excuse of being busy…and thus distracted.), they couldn’t find the time (or bandwidth) to pay attention enough to basic documents or questions needing to be answered to get their loans approved. This to buy their dream house.

Like the young men at the local market who are too distracted to pay attention to “sell-by” dates on the milk cartons, so many of us are distracted to the point of distress. You’re literally ruining your lives, either personally or professionally, or both, with your failure to recognize and control your distractions. These distractions are not solely the fault of our smartphones. Or even social media.  There are all kinds of static-inducing disruptions to our days.

Trevor, as a student of economics and history, he puts these distractions down to a single phenomenon, one that is (finally) getting more attention in the media. That phenomenon is directly related to money.  More specifically, earning money and the cost of living. We’ve watched this distressing trend grow from the early 1990’s, through the boom times and recession times, and especially after the global recession that resulted in 2010 from the mortgage meltdown.

People have been struggling to “catch up” with costs, and earn a decent basic living for decades; but that struggle received a new infusion of chaotic confusion after the global recession. The rich definitely got richer, none of the bankers or financing titans went to jail or paid any kind of price for causing this worldwide calamity, but the average working person today has paid, and continues to pay, the price for that more than decade old recession.

COVID-19 only exposed the brutal reality of this financial duress in the most blunt terms possible.

But, those of us who have struggled and continue to struggle, we fail to recognize this calamity. Instead, like bugs scattering when you lift a stone up, we simply go about our days, go about our business, go about “living” in a way that seems to us to be satisfactory.

Wake up.  Your distractions are killing you. You need to save your own life and you need to slow yourself down and you need to focus.

Take your pick of the things that are killing you, or will kill you, or your children: Climate change. COVID-19. Politics. Driving fast combined with distracted driving. And on and on.

We have three suggestions, or “rules” on actions you can take to reduce, and hopefully, eliminate, distractions from your life.

Rules to not be distracted:

  1. Take Care
  2. One At A Time
  3. There’s Plenty of Time

Take Care

We use this rule with our financing practice. Think of the old carpenter’s adage: “Measure twice, cut once.” That’s essentially what “Take Care” means. Whatever activity you’re undertaking, whether you’re stocking the milk cartons, preparing financial documents for your business or to buy a home, making decisions that could affect your or your children’s well-being, take the appropriate care with that process. Look at the solutions, the consequences, the pro’s and the con’s; look at the mechanism, about what it will take to accomplish whatever it is you’re doing or deciding on. Then, put all that good brain-power you just expended to work.

One At A Time

We refuse to waste time arguing, or reading about, whether or not multi-tasking is a good or bad thing. We prefer to think from the positive perspective: doing ONE thing, allocating time and energy to that one thing, and accomplishing that ONE thing, is a worthy enterprise. It works. Time and time and time again: when you’re focused on ONE thing, from spending time speaking to an elderly parent, or preparing your documents for your tax returns, or whatever task or mission you need to accomplish, large or small, when you do only the ONE thing at one time, not multiple things at the same time, your results are so much more gratifying and accurate.

This also saves time from having to go back and redo something again.

There’s Plenty of Time

We’re convinced that somehow we all have come to believe that time is running away before our very eyes and that if we don’t hurry up, we’ll miss out on something.

There’s this trend, apparently, among the younger folk, to take time for getting the most out of their young lives now. That’s why they don’t want to be trapped in jobs that are mind-sucking-soulless-energy-sapping endeavors to earn money and nothing more. A good meal with friends; rock-climbing; doing nothing for its own sake. These activities sound more like retirement, but in reverse because the people doing them are all young. It’s as if they believe they’ll run out of time.

We posit this concept: when you’re young is actually the BEST time to invest in yourself for your future, whether that’s education or earning, or any combination of the two.  Further, spend your time wisely. The time’s not running out; but YOUR time to create something good for yourself in your life is running out, because economics will catch up to you with bills you’ll have to pay, families you’ll have to clothe, house and feed, and energy that wanes as your years progress.

Embrace your life by all means; live for your moment. But do it in a way that is well-considered. Take into account that, short as all our lives are relative to the Universe at large, there’s actually plenty of time.

Distracted while writing this: We confess that, as we wrote this, we were distracted a few times. Maybe that’s part of the writing process, taking time to think, although some of the best writers in the world say you should lock yourself in a room alone with no distractions and do nothing but write. Hemingway started every one of his days that way: with no distractions and focused on his writing and we all know how that turned out for him.

We don’t believe we allow ourselves to be distracted in the ways that we see so many other people churning through their lives.  And, we can honestly say this: we have accomplished some fairly incredible things in our lives by following these three aforementioned rules. Focusing and refusing to be distracted.

We hope our little discourse didn’t distract you too much.

Break It Down

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.