Small Business Administration’s catastrophe loan program is a disaster, say business owners


Small business owners who have applied for the state’s Economic Injury Disaster Loan program say efforts are confusing and funding is slow, which is why some of the complaints against those much maligned by the government are. reflects Paycheck Protection Initiative.

KB Brown, owner of Wolfpack Promotionals, a Minneapolis, Minnesota print shop, told CBS MoneyWatch that shortly after applying for EIDL, as the program is called, he was informed that his company was up for a US $ 10,000 loan Dollar is ready. However, the final loan amount was significantly lower.

“First we were told it was $ 10,000. About a month later, on April 23, we found money in our account, but it wasn’t nearly what we thought we were getting,” he said.

Minneapolis printer owner KB Brown said the $ 3,000 he received through the SBA’s Economic Injury Disaster Loan program is far less than he needs.

Courtesy KB Brown

Both the Disaster and Paycheck programs are designed to help small businesses stay afloat when economic growth is due to the Coronavirus. But weeks after applying for the EIDL, Brown said he only received a $ 3,000 advance on the loan, which isn’t even enough to cover business expenses for a month. He doesn’t know if he’s going to be approved for a major catastrophe loan and finds that he hasn’t received any follow-up information from the SBA.

“Right now, on the low end, we need at least $ 25,000 to catch up, make sure our salespeople get paid, and bring people back,” Brown said.

The EIDL program is designed to provide companies with a loan advance within three days of a successful application, according to the SBA website.

Almost all of the companies applying for EIDL funds applied for the emergency grant to help them while they wait for their full loans to be processed, according to a opinion poll from the National Federation of Independent Business. The SBA claims it has processed more than 755,000 loan advances totaling more than $ 3.2 billion and approved nearly 27,000 loans totaling more than $ 5.5 billion.

But business owners from across the country told CBS MoneyWatch that the program fell short of their expectations. And according to the NFIB survey, “most of the EIDL applicants still have an update on the status of their application and no applicants for small businesses have yet” [reported to the NFIB they] received the loan or the emergency grant. ”

Around three quarters of the people surveyed by the NFIB said they were frustrated with the application process and the lack of communication with the SBA.

Bryan Davis, founder of Teddy Stratford, a direct seller of men’s shirts, also counted on immediate support from the EIDL program after its sales plummeted as Americans cut spending.

Bryan Davis, who founded a men’s shirt company, said he hadn’t received any discharge from the federal government for his business.

Courtesy Bryan Davis

“Business went from perfectly fine to literally less than nothing,” said Davis. “I thought that $ 10,000 was going to keep the wolves away.”

Instead, Davis is still waiting for feedback on his application about three weeks after applying for EIDL funds. “The strange thing is, I didn’t hear anything. I wonder if I didn’t fill it in correctly, if I had to take another step that I didn’t know about, or if it’s caught in the balance?”

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Other business owners said they were initially offered five-digit loan offers that enabled them to see a way forward for their business – only so that those lifelines mysteriously disappear after trying to take them.

Denise Brown, a controller for Molly Moon’s homemade ice cream, a Seattle, Washington-based ice cream chain, told CBS MoneyWatch its company has been offered a $ 500,000 loan through the EIDL program.

“It was really something that would get us through and we felt like we got some relief,” she said of the loan.

The relief was short-lived. “We said we were making a business reopening plan only to find the next day that the loan was in ‘denied’ status. After we were approved there was a zero dollar loan amount and the SBA helpline said they couldn’t give us any additional information. “

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Brown is still waiting for an explanation as to why the original offer of aid was suddenly withdrawn.

“The entire company took this ride where we had a plan just to pull the rug off our feet,” said Brown. “It’s so hard when there is so much uncertainty about what the future will look like, because there is also such uncertainty about what help we can expect from the government.”

Molly Moon’s homemade ice cream isn’t the only small business whose loan seems to have suddenly gone.

Andrew Volk, who co-owns the Portland Hunt and Alpine Club, a bar and restaurant in Portland, Maine with his wife Briana, received an EIDL offer on April 14, about a month after applying for the program.

“We logged into the portal that said we were approved for a loan that would have allowed us to reopen,” said Volk. “There was a moment when Briana and I looked at each other and said this might be the solution for us right here. That could work. It was a great feeling, ”he said.

Again, the excitement didn’t last long. Volk accepted the loan only to find out that the offer had been rejected. “We have received a message that essentially reads: ‘We are currently no longer able to process your application. You will receive an email with further details.'”

A week later, he has still not received any clarification from the SBA, whose customer service representative he described as “very friendly, but clearly new to the job”.

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Volk now has the feeling that he is back at the beginning. “I’m on hold now. There was this movement and now the SBA has run out of money for EIDLs. I’ve been turned down and there is absolutely no one who can explain why,” he said.

SBA officials did not respond to CBS MoneyWatch’s requests for comments on the EIDL program and business owners’ complaints about their experience.

Brown, who owns the print shop, said the lack of federal aid means he faces tough choices. His wife applied to Amazon and he is considering selling some of his printing equipment. But that might not be enough either.

“The bills don’t stop so we need to figure out what we’re going to do. Are we defying the orders and moving forward with the reopening?” Said Brown. “I am asthmatic and have lost family members to the virus, but we may have to open up, but because we need the money and we are not getting anything.”


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