Freddie Harb faced financial collapse in 2020 when his entertainment booking company, Sleeping Giant Music, was shut down due to the Covid epidemic. The San Diego businessman claimed that he resorted to the U.S. Small Business Administration in case he needed assistance with payroll because live events and concerts had been put on hold for the most part. Like over 4 million other small business owners, he was given what is known as a disaster loan for economic injury.
However, documents reveal that despite Harb’s repeated attempts to pay back the loan, the agency never collected his money. He found out three years later that his company was in collections and that he was in default.
In an interview, Harb stated, “I wish I never got that loan.” It has truly been a nightmare.
Like Harb, a number of other small business owners have found navigating the SBA’s Covid catastrophe loan program to be equally excruciating. They claim that the agency’s internal accounting and processing problems caused their loans to be incorrectly classified as late or in default.
According to Trevor Curran, co-founder of Aurora Consulting, a Connecticut-based company that has assisted numerous small business owners in managing and obtaining SBA loans, it’s a total s— show. poor communications, inept processing, and malfunctioning internal systems.
Several business owners accused of default have experienced actual financial repercussions as a result of the agency’s alleged errors, including intercepted Medicaid payments, garnished or withheld Social Security checks and tax refunds, and files sent to private collectors who have flagged delinquencies on credit reports, in addition to the additional stress and wasted time trying to correct errors, Curran said.
When asked about specific collection techniques, a representative of the Treasury Department—the federal government’s office responsible for collecting on defaulted loans—said that they are employed as a last resort.
The SBA stated via email that it was unable to comment on specific loans due to privacy concerns. However, according to a spokesman, the agency improved its payment system in a variety of ways last year. According to the spokesman, it had also made a major effort to contact each borrower as their loan payments started and as their debts became past due. According to the statement, that has amounted to over 115 million phone calls, over 16 million emails, and about 1.7 million USPS letters to date.
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