Brandon Friedman, a US Army veteran and former Obama employee, believes his frustration with the US Small Business Administration is the reason why business owners don’t like dealing with government.
His predominantly online company, Dallas-based Rakkasan Tea Company, relies on sourcing tea from Asian countries affected by the Delta option.
“If I can’t buy tea, I have nothing to sell,” Friedman said.
Friedman and fellow veteran and co-founder Terrence “T.K.” Kamauf was delighted to receive a letter from the SBA on April 7 stating that they are eligible for an increase in the incidence of COVID-19. Economic Disaster Loan, a low interest loan for small businesses and non-profit organizations experiencing loss of income due to the virus. Initially, the company received an EIDL advance of $ 1,000, followed by a loan of $ 23,000. In April, they were told they were eligible for a $ 72,000 raise.
On April 15, they told the SBA they wanted to apply for a raise. Ten days later, they presented supporting documents, but quickly realized that they had chosen the wrong tax form. But there was no way to get back in shape and correct the error.
“This is where our saga begins,” Friedman said.
He wrote an email and called customer service, and on May 14, he finally got directions on how to fix the error. On May 16, he submitted a signed form.
The months passed. He kept calling the SBA, which eventually informed him that he had previously refused, but could not say why. Friedman said that he assumed it was probably a tax form problem and he could submit the correct one again. They told him to wait.
Friedman received a July 2 letter last week stating that Rakkasan’s request was denied due to tax form.
“We were literally trying to help the SBA not make this mistake even before I submitted the signed application,” said Friedman, who previously worked for the Department of Veterans Affairs.
“If I worked for a federal agency and I know how to navigate the federal bureaucracy, and I can’t figure out how to navigate this, then how is the average business owner going to do this?”
Applicants and loan officers say last year’s EIDL loan applications were easy and money quickly made its way into bank accounts. In fact, the SBA’s COVID programs – including both rounds of the Payroll Protection Program and the Restaurant Recovery Fund – are commendable, they said.
But they do not regret this second wave of EIDL credit increase, calling it unprofessional, disorganized and a nightmare. This is because last year all that was required was a self-certified questionnaire by the applicants. This year, the SBA is requesting documents to verify responses to applications – but only after the application is submitted – supporting decisions and disappointing job seekers…
As of July 8, the date of his last reportThe SBA has approved 3.8 million EIDL loans totaling $ 217.2 billion.
The SBA has increased its management capacity and increased resources for the EIDL program, the SBA said in a statement. It helped streamline the application process, he said. Data showing this positive trend will be available on the SBA website this month.
“It will be announced very, very soon,” said spokeswoman Shannon Giles.
Soon is not anytime soon for small business owners who say they desperately need money.
“They shouldn’t call it an emergency loan. They should call it a “if you’re lucky” loan so we don’t pin our hopes on it, ”said Mike Zinberg, owner of a New York-based video equipment company.
Zinberg also received an email stating that he was eligible for a promotion. His original EIDL cost $ 10,000. After sending emails in November, he was able to increase the loan to $ 150,000. In March, he received another email warning that the credit limit had been increased to $ 500,000. He applied and within three months the SBA portal showed that his loan was not being processed. The SBA told him to wait. In mid-July, he received an email stating that his request had been denied, but he could reapply if he corrected the reasons why he was denied.
But the SBA did not tell him what happened, he said.
“I would love to provide additional supporting documents, but they did not indicate what was missing,” he said. “You can’t send an email to struggling business owners and say we can help you and then plunge you into a black hole. It’s not good, because then you start counting on it. “
Two discerning consultants Trevor Curran and Linda Rae transformed their Connecticut-based Aurora Consulting business in March 2020 to help business owners apply for EIDL loans. Consultants are allowed to charge up to $ 2,500 for assisting a client with an EIDL loan.
By mid-summer, they had submitted 40 applications and all were approved. According to them, there were no real complications.
“While the SBA has a bad reputation, it has been overlooked for what it did with the EIDL program last year,” Curran said. “In fact, it was stupid to get money last year. Essentially, the application was an online questionnaire and was not reviewed. This is the miracle of the EIDL program. “
But this year, the duo had 17 hours a day to get EIDL approval for clients.
The main problem is that the self-certified numbers that the SBA requested last year must match the paperwork, including tax forms, it is requesting this year. Many businesses have not yet filed their tax returns last year and have evaluated the data. The SBA is now rejecting them for non-compliance.
The EIDL loan asks for gross income for the period February 1, 2019 to January 31, 2020.But the tax return forms are based on a different period from January 2019 to December 2019. This continues to confuse EIDL loan officers who do not receive much preparation, Curran said.
“I had to explain to the SBA loan officer this morning that the tax return period does not coincide with the EIDL disaster period,” Curran said. “He told me he hadn’t received any training.”
Curran and Ray, who now have 225 US clients, run YouTube channel to help business owners cope with difficulties. A poll on their channel showed that out of 500 respondents, 78% applied for a business loan for the first time.
But, according to Curran, it’s not worth calling the customer support team that could help these business owners. According to him, candidates are either being told something of no value, or it is wrong. “If you can’t help calling them, ask yes or no questions,” he said.
For small business owners, EIDL loan money often determines whether they close or live until 2022. Curran and Rey shed tears describing the emotional reaction they witness when they tell job seekers they’ve been approved.
One client who makes wigs for cancer patients and doesn’t have the money to fly to her father’s funeral last year was recently approved.
“We both cried,” said Curran.
The loan application is the same questionnaire as last year. But there are still questions that can easily confuse job seekers. For example, if you copy and paste your company name into the form, it won’t let you continue, but it won’t tell you that it’s because you didn’t enter the name manually.
Curran and Rey say the SBA needs to respond to complaints from business owners, from issuing detailed instructions on how to complete an EIDL application to improving communication.
“Right now, the only thing they are consistent about is how inconsistent they are,” Curran said. “They need clear messaging.”
Curran tells the business owners to “stop questioning and start filing” the required paperwork.
Likewise, Rakkasan’s Friedman is urging the SBA to go to Congress and ask for more staff and drop some of the due diligence requirements in order to get loans faster.
Friedman knows little about mass backing up the system, as he worked for the Department of Veterans Affairs in 2010, when the number of applications for disability benefits increased. There was a sense of urgency to fix the system so that the government could provide veterans with their benefits.
According to him, he does not see this in the EIDL program.
“I’ve seen such processes accelerate,” he said.