AmiSight 11/9: The EIDL Bill Is Coming Due. And It’s Getting Ugly.
During COVID, the SBA handed out nearly $378 billion in EIDL loans to almost 4 million small businesses. Six years later, the government is coming to collect.
A new Forbes article, which I was quoted in, highlights the growing problem. More than 562,000 loans were referred to the Treasury Department for collection in April. Borrowers can face a 30% collection penalty, and those who personally guaranteed their loans could be putting their personal assets at risk.
I told Forbes that during COVID, the SBA was handing out money like cotton candy. Traditional underwriting largely went out the window, and the government suddenly had millions of loans it wasn't equipped to manage.
To be fair, the goal was to save businesses and jobs during an unprecedented crisis. And there was certainly fraud that deserves to be prosecuted.
But there's a big difference between fraudsters and honest entrepreneurs who borrowed in good faith and simply couldn't recover.
Taxpayers deserve repayment, but struggling business owners deserve a reasonable path to work things out.
My advice to anyone with an outstanding EIDL loan: Don't ignore it. The longer you wait, the fewer options you may have.
The pandemic is over. For many small business owners, the financial fallout isn't.
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