In a report recently furnished by the SBA, it shows they have approved less than 4% of EIDL Targeted Grants to small businesses. This is not the help struggling businesses are seeking…
The report details, as of April 28, 2020, only 89,755 businesses have been approved for a total of $733,159,000. The program was allocated $20 billion dollars from the December 27, 2020, Covid-19 bill. This means only 3.66% of the total funding designed to help small businesses was approved. In comparison to the first Covid-19 bill signed on March 27, 2020, 100% of EIDL grants were exhausted within three months. Also, in contrast, they have exhausted the PPP program each time it was funded. Many small business owners are frustrated with the SBA’s handling of the EIDL programs, to say the least.
There are several ironies of this situation. There’s a contrast in the speed of funds disbursement, an incompetent application processing system, and the irony of fraud.
It is no secret, the SBA’s process of facilitating the Targeted EIDL grant is atrocious. First, they invite businesses via email to apply for the grant- assuming they meet a set of criteria. Many small business owners are still waiting to receive an invite.
Second, once a business receives the invite, they fill out a form to confirm initial EIDL loan information and offer 24 months of their revenues to show if they experienced more than 30% loss. I personally say it’s safe to say most businesses lost more than 30% of revenue during the pandemic as the world economy came to a halt.
Third, the applicant’s next step after submitting this information was to wait for yet another email, prompting them to sign in to their portal to submit a tax authorization form from the IRS. The problem, most never received this next steps and have been sitting in limbo for weeks. Also, most applications who may qualify for this grant received a loan from the SBA. The time for requesting a tax authorization form should have been at the initial loan application stage. Isn’t this rather late to request a tax authorization form months after funding a loan?
Alternatively, if applicants get beyond the aforementioned barriers, some get denied for a variety of reasons. Including Sue Jenson who owns a catering company in Little Rock, Arkansas. Jenson was denied a $9,000 grant because the SBA claimed she did not prove she lost more and 30 percent during 2020. Her denial letter stated, “Not Eligible: The applicant business did not substantiate the required reduction in gross receipts to establish an economic loss greater than 30 percent.” Sue Jenson showed us her gross receipts and we can confirm she lost more than 70% of gross receipts. Unfortunately, Sue is in the same boat as many other small business owners with no recourse but to submit for reconsideration. Which is via email, and takes weeks to receive a response if any.
Back during the Covid lockdown days, the grant portion was quickly exhausted as $20 billion was sent to over 5.7 million businesses. In order to stretch the funds to more businesses, the SBA changed the grant criteria to $1,000 per employee. And those businesses that did not have 10 employees only received $1K per employee. The targeted EIDL advance program was designed to give those applicants up to the full $10,000 grant from their initial application. Many applicants were smaller businesses with single owner-employees or two owner-employees; the data supports this. When we crunched the numbers, we found those recipients who did receive a targeted advance received an average of just over $8K.
Allegedly, a considerable percentage of this was falsely claimed as some applicants grew wise and stated to claim 10 employees in order to receive the full $10K grant. I suspect the SBA’s slow disbursement of the funds is out of caution to not make the mistake of funding fraudulent grants, again.
This is very frustrating for a small business owner to wait months to receive their grant. The SBA already has the initial applicant’s information and instead of all instituting cumbersome processes– they should simply disburse the funds to those small businesses that did not receive the initial $10K grant. To add more insult to injury, they have already rolled out the Supplemental Targeted EIDL Advance program, which offers an additional $5K to those businesses who experienced more than 50% loss of gross receipts. How can they start processing the next program when more than 96% of the current program is unfunded and in utter chaos?
Has your business interacted with the SBA regarding loans and grants? What has been your experience? Tell us in the comments below!
