SBA advocates for more emergency loan seekers, after rejecting dozens of business owners

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Dana Glosson and her husband, Toby, were making about $ 170,000 a year before the pandemic from their Georgetown materials hauling company, Glosson Enterprises. But in May 2020, Toby caught the virus and spent months in the hospital. He died three months later.

“It’s like one thing after another and I just can’t get my head out of the water to even get over one loss to move on to the next,” said Dana.

Toby was still the driver, while Dana was the accountant. Now that she’s on her own, Dana, 57, has created a new business plan to buy a modified van so that she can be a medical transporter. She applied for a low-interest loan of $ 218,000 from the US Small Business Administration’s Economic Disaster Loan Program, created to boost small businesses and nonprofits that experience loss of money. COVID-related revenues.

Almost a year after her husband died, her loan application was turned down. Last week, she started a remote customer service job to help her survive.

“There is sadness in our government because it passed the law so that the money is there, and why can’t they give it to people like me who have the drive and a business plan ? ” she said.

Glosson is far from the only one. There was a massive wave of rejections sent in July for the EIDL program with generic language that frustrated many business owners. They were told they could reapply, but were not told what to correct in their request.

The EIDL is meant to replace lost sales to new businesses, but that’s not the reason Dana was turned down. His request for an EIDL increase was sent in December and there is nowhere on the app to say how you plan to use the money. And since she plans to continue in the transportation business, this is not a violation of EIDL terms. Now she wonders what she did wrong.

Veronica Pugin, senior advisor to the SBA’s Access to Capital Office on EIDL applications, said the loans were turned down for a variety of reasons, including failure to meet credit score requirements or errors on creditors. requests. She said the agency was working to provide more details in future rejection emails to applicants.

“We noticed that many applicants were looking for a more detailed explanation than the broader category around unverifiable information, so we will be making an improvement on this,” she said.

The SBA has “a lot” of funds left in the EIDL program, and business owners with 500 or fewer employees can apply until Dec. 31, Pugin said. Small businesses make up 99.9% of U.S. businesses and employ 47.1% of U.S. employees, according to the SBA.

In June and July, the main complaint about the program was that applications were not being processed quickly enough, given that it was “emergency” funds for struggling businesses. The SBA has since hired more staff and increased training at all levels, Pugin said.

The agency went from less than 2,000 requests per day on June 28 to more than 37,000 requests per day on July 28.

“With this expedited process, you’re going to see a higher volume of approvals and denials,” she said.

Nationally approved EIDL loans reached $ 3.8 million for a total of $ 258.5 billion on August 19, the last time the data was updated. This includes 326,330 loans approved in Texas, for a total of $ 22.2 billion. The SBA did not know how many loans were turned down.

Loan officers Trevor Curran and Linda Rey saw their Aurora Consulting financial practice be wiped out at the onset of COVID.  They quickly turned to consultancy work for other business owners wishing to apply for an EIDL loan.
Loan officers Trevor Curran and Linda Rey saw their Aurora Consulting financial practice be wiped out at the onset of COVID. They quickly turned to consultancy work for other business owners wishing to apply for an EIDL loan.

Connecticut consultant Trevor Curran called the massive wave of loan denials “utter shame” because it looked like the SBA had swept a load of files into the trash when it changed the internal office to review new demands.

The SBA should have let the new team review the applications instead of turning them down, said Curran, who runs Aurora Consulting with his partner, Linda Rey. They help business owners apply for EIDL loans, each charging up to $ 2,500.

The reasons given – “unverifiable information” or “unfounded economic harm” – are “insane and leave candidates ashamed and scratch their heads,” Curran said. In one case, a request he submitted for a client was refused for “inactivity and lack of interest from the requester,” even though he says he responded to every SBA request within hours.

The SBA has touted the improvements to the program, but Curran said these are “minimal at best.” There was a day in late August when the SBA portal was inaccessible, he said. There has been some increase in responsiveness to requests. But there’s always a backing of loan and reconsideration requests “languishing” in the SBA’s processing systems, Curran said.

The general consensus is that the original EIDL applications in 2020 were a snap. But asking for a raise in 2021 has been a nightmare, with the SBA this time demanding detailed supporting documents.

The SBA has made faster processing of claims a “high priority,” Pugin said. That’s why it’s had a big hiring surge, even taking employees from other COVID-19 SBA programs that are about to shut down, like the Restaurant Revitalization Program and the Paycheck Protection Program. . The new team wants to provide better information on how applicants can ensure they have the most accurate request possible the first time around, she said.

Bill Carr, owner of Dallas Millwork, said his loan application was refused due to an inconsistency in the addresses he had tried to notify in advance of the SBA. Agency officials told him he would be turned down due to the incompatibility, but there was nothing they could do to help fix it. He would just need to wait to be denied and then reapply.

“It has fallen on deaf ears,” he said. “It’s like watching a train wreck in slow motion.”

Rakkasan Tea Company co-founders and veterans Terrence Kamauf (left) and Brandon Friedman should know how to get approval for an SBA loan from Friedman's experience in the federal bureaucracy.  But like many businesses, they waited three months for a life-changing loan before being turned down.

Carr, 51, said his original EIDL loan was $ 109,000 and he was eligible for an additional $ 324,000. Aurora Consulting took over and resubmitted its application. Now he is back to waiting.

“Now the SBA has tightened their belt so tight that if you don’t come across a T in an address spelling, they’ll turn you down,” he said. “I am about to close my doors because of a bad postcode. “

Carr took out a loan from the SBA to buy the business five months before COVID hit. This means that the SBA is asking for the repayment of these loans while keeping its request for an increase in the EIDL at a time when it cannot obtain materials or employees to run the business. Materials prices have gone up 50%, he said, and he’s not even paying himself the hourly rate his workers now want..

When he bought the business, it was making around $ 1 million in revenue per year. Last year, revenues dropped to $ 200,000. Its workforce has dropped from 14 to three. He had to invest in equipment to automate the process in order to reduce manufacturing time and personnel costs.

He has built up his personal credit to stay in business but he has less than two months left, he estimates. He is considering bankruptcy as an option if his new EIDL loan is not approved.

“Right now it’s melee,” said Carr, who was hospitalized earlier this year due to stress. “I don’t have the capital reserves to last longer. It’s like the American dream is flushed down the toilet.

If you’re a business owner, we’ve put together expert advice on how to avoid common mistakes on COVID EIDL loan applications.

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