Archive for: ‘May 2021’

When the pandemic support was delivered to Fundamental Road, criminals seized

May 16, 2021 Posted by kyu7

Korena Keys’ small business was hit hard when the pandemic first started last year.

KeyMedia Solutions, a digital media company of Sioux Falls, South Dakota, posted a 60% year-over-year revenue decline in May. She was able to secure a $ 115,000 loan from the Small Business Administration’s paycheck protection program to keep the workers busy until things stabilized.

When Keys received filing from the SBA in January that an additional $ 150,000 loan had been taken out on behalf of her company under the Disaster Loan for Economic Injury program, she believed it was a mistake.

Korena Keys runs a digital marketing company in Sioux Falls, South Dakota. She received help from the Small Business Administration’s Paycheck Protection Program, but found that her identity was stolen in order to obtain a fraudulent loan under the Economic Injury Disaster Loan Program for $ 150,000.

“We made a conscious decision not to seek any other assistance,” said Keys. “We thought these funds had to be left for companies that are not doing so well.”

Although she says she didn’t receive the money, the loan is very real and payments of nearly $ 800 a month are slated to start in November. The loan was approved, Keys said, despite the fact that the application contained inaccurate information about their company, including an incorrect phone number, email address, and financial details.

“The shock of that really turned into frustration and anger,” Keys said, adding that several other companies in their community had similar stories of identity theft in these aid programs.

She has filed claims with the Inspectorate General of the SBA and his fraud department, but she has not yet been released from responsibility, although she is hopeful that things will be cleared up before the loan falls due. Hours were spent damaging their business and trying to pay off the loan.

“It definitely caused some sleepless nights,” she said. “Until it’s in writing, I always worry. It’ll just hang over me until it’s done.”

Get help out the door

When the U.S. government and the SBA rushed out of the door last year for companies hit by the pandemic, criminals took advantage of these assistance programs and in some cases stole the identities of business owners to use this information to fraudulently Obtain credits for profits. A recent analysis of SBA’s OBA project fraud under Covid-19 small business programs could reach $ 84 billion.

In total, the U.S. government has provided more than $ 1 trillion in aid to Main Street through the Paycheck Protection Program and the Economic Injury Disaster Loan Program. The PPP allows small businesses to take out loans that can be extended if the borrower spends most of the capital on payroll, while the Covid-19 EIDL program gives borrowers access to loans based on temporary loss of revenue due to the pandemic. There was also an advance payment under the EIDL.

The OIG’s review of both programs warned of the potential for criminal exploitation due to the rapid progress of implementation and unprecedented demand for help. A recent memo from the House Select subcommittee on the coronavirus crisis describes how widespread it could be. The memo granted potentially fraudulent EIDL loans and prepayments of $ 79 billion and potentially fraudulent PPP loans of up to $ 4.6 billion.

1.34 million EIDL loans and grants have been sent to the OIG by the SBA, including nearly 750,000 referrals for suspected identity theft and more than 585,000 referrals for other potentially fraudulent activity. There have been nearly 150,000 hotline calls to SBA OIG for tips and complaints about potential fraud – an increase of 19,500% over previous years, the memo says.

The Paycheck Safety Program could run out of cash earlier than the Could deadline

May 1, 2021 Posted by kyu7

Customer Tamara Jenkins will try on a hat with Meeka Robinson Davis, owner of One-Of-A-Kind Hats, in the store in the Windsor Hills neighborhood of Los Angeles on November 24, 2020.

Small businesses are finding that they may not have much time to access the paycheck protection program as they thought.

That’s because the money is running out.

Legislators overwhelmingly supported the extension of the PPP last month, postponing the March 31 deadline to May 31. The program, established by the CARES Act last year to provide small business loans that are forgivable when used primarily on payroll, reopened in January for a second round of more than 284 Billion dollars.

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The American rescue plan passed in March provided the PPP with an additional $ 7.25 billion, bringing the total to nearly $ 292 million.

As of April 5, the Small Business Administration, which oversees the program, has approved nearly 4 million PPP loans worth approximately $ 224 billion, according to the agency. That means there is roughly $ 68 billion left.

The idea of ​​running out of money hadn’t crossed my mind, at least in this round of the program, until shortly before the extension. In a March 24 hearing before the Senate Committee on Small Business Entrepreneurship, Patrick Kelley, associate administrator at the SBA Office of Capital Access, noted that there is about $ 79 billion left on the PPP, which will be depleted by mid-April would pace if applications were continued with a similar company.

Additionally, at this point the SBA had around 190,000 loans held to fix pending application issues, which continued to draw on the remaining funds.

“This program, as you know, won’t resume until May 30th due to a tight budget,” said Erik Asgeirsson, president and CEO of CPA.com, the business and technology arm of the American Institute of CPAs. “I don’t think anyone knew the money was going to run out until the SBA made this announcement.”

The bumpy road of the PPP

Although the program has helped millions of companies keep employees on their payroll, the program has been plagued with problems from the start thanks to its rapid adoption. The first round ran out quickly, with the money going mostly to larger, more established companies, leaving out those most at risk.

When the second round opened in January, smaller businesses had better access to funding, but processing times took longer as the SBA introduced new anti-fraud rules.

Further changes created more confusion. In February, the Biden administration announced updates to program eligibility, a new credit calculation formula for sole proprietorships, and a two-week priority application window for companies with fewer than 20 employees.

The aim was to give the smallest companies, which are mostly owned by women and colored people, access to the forgivable means. However, the timing of the new rules left little time for companies to take advantage of them. Additionally, sole proprietorships who applied before the new loan calculation was announced were upset as the difference could be thousands of dollars in forgivable funding.

We have finally reached a point where we have some equity for our hardest-to-reach and most underserved businesses.