Zennie Abraham note: here’s another horror story sent to me by a person I do not know. I have taken up the action of regularly posting their emails to our ZENNIE62MEDIA Oakland News Now Blog. It is really puzzling why Congress, both democrats and republicans, do not take action to fix and extend the Small Business Administration (SBA) EIDL Program. But, here’s the story.
We, Company X applied for an EIDL loan (from the SBA) on April 22,20120 and first received a targeted advance of $10,000.00 as a grant on May 02, 2022. We continued, once we received the grant, to apply for an additional loan of $100,000.00 from the SBA. At the same time, Bank of America (our long time business bank) contacted us proposing that we should apply for our PPP loan with their bank.
We completed and submitted their required application which included a sentence under “Treasury Guidance” that stated “The Paycheck Protection Program Loan is calculated by multiplying your “Average Monthly Payroll by 2.5 and then adding your EIDL amount (if applicable)”. Our perception of that sentence led us to believe that we were asking for our PPP Loan and “adding our requested EIDL loan” that was already under application at the SBA and to be included in the PPP Loan.
(As a side note, our understanding went further as a result of the fifth (5th) bullet of the “Treasury guidance” which stated “If Applicant is refinancing an Economic Injury Disaster Loan (EIDL): Add the outstanding amount of an EIDL made between January 31, 2020 and April 3,2020, less the amount of any ‘‘advance’’ under an EIDL COVID-19 loan, to Loan Request as indicated on the form.”) The difference between the two sentences was confusing and led us to believe that the first meant that they just wanted to know how much payroll we wanted from BofA + whatever EIDL we wanted to get elsewhere (since it was still under application). The second sentence did not occur to us as we had no outstanding amount and figured that BofA would have checked that and SBA would have known that we had an outstanding application.
Bank of America approved a PPP loan amount of over 150,000.00 and deposited which surprised us based on the payroll calculation we presented. According to the terms of the loan, we established an 8-week program and immediately began to distribute the funds. After 5 weeks, Bank of America contacted us, stating that we were over-paid in the amount of $100,000.00. We explained to Bank of America that the funds were already in the process of being used for the payroll. They told us that our company would have to repay the $100,000.00 immediately or other actions would be taken. As a matter of fact, we began receiving threatening calls and emails.
As of today,
1. Over the course of time we have received 5 threatening calls from Bank of America with respect to the $100,000.00
2. Bank of America is not taking any responsibility for checking to see whether we were notified of being overpaid until 5 weeks into the program.
3. Bank of America has told us that SBA would contact us about the $100,000.00 and turn this amount into an EIDL loan. (We have not received any information from SBA).
4. Bank of America is telling us that our problem is now with the SBA – SBA is telling us that our problem is with Bank of America?
We are quite perplexed about how to handle this situation and are asking for your guidance in this matter?
Beginning the “forgiveness” time period:
We began working on the forgiveness application form received from Bank of America on May 21st 2021. When we opened the form, the form sent to us was the 3508S version which is for borrowers that took out loans of less than $150,000. – see attached form. Also, we noticed that they had established a loan forgiveness maximum amount of $76,540.01 which was already entered into the application form, grayed out and therefore not editable.
If we complete the form they suggested, using the information they advised, we will be agreeing to repay the balance of $87,216.99 (the vast majority of which was applied to the payroll during the eight (8) week period of May – July of 2020). In addition to that, the amount of money remaining from our PPP loan funds covered a number of items that are recorded in the list of the forgiveness documents.
Our questions continue to remain unanswered. They are as follows:
1. When the time came to begin the forgiveness application process, we did not know what action we should take with respect to the forgiveness application in the amount of the $163,757 deposited in our account or the forgiveness application in the amount of $63,757 (which is the amount that Bank of America decided was correct). (As we stated above in paragraph 1, the Bank has generated their own formula for our maximum forgiveness amount.)
2. When will the time come, that Bank of America or SBA will take the ownership of dealing with the $100,000 amount that BofA included in our PPP Loan in May of 2020 (see paragraphs 1 and 2 above).
3. We would very much like to be able to ascertain what entity has the rights to verify which organization is responsible for determining the amount we should use as the PPP Loan and which is to be dealt with as EIDL funds, so that the forgiveness amount is accurately calculated.
As a final note, after we first spoke with the SBA and explained that the forgiveness amounts seemed not to balance, they suggested that we contact their Office of the Inspector General.
We followed their direction on May 10th of this year and sent our information using the online application of the Office of the Inspector General. The information sent is very similar to what this document contains. We have yet to have heard from anyone in that office.
We have looking for suggestions as to our next step to resolve this dilemma. We are doing so as we do not want to continue to the point that our forgiveness period will expire and we will be left in the circumstance of having interest accruing to amounts that were or were not forgiven.
We are quite perplexed about how to handle this situation and are looking for guidance from the appropriate organization or department.
Sincerely,
BOA / SBA Confusion Client