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U.S. Small Businesses Face Challenges Repaying Delinquent Covid Loans

Updated: Apr 15

  1. Time's Ticking for Covid Loan Repayment: The Small Business Administration (SBA) is pursuing up to $20 billion in delinquent Covid disaster loans, affecting about a million small businesses and nonprofits.

  2. Loan Challenges Continue: The SBA has referred loans with balances under $100,000 to the Treasury for collection. Loans over $100,000 have already been sent.

  3. Understanding Loan Defaults: Around 20% of the $390 billion Covid loan portfolio has been charged off, including Treasury referrals and other factors like fraud or bankruptcy.

  4. Facing Financial Hardship: Borrowers can avoid collection by requesting hardship assistance, but challenges persist due to various factors including fraud, weak finances, and unclear communication.

  5. Real-Life Struggles: Stories like Mitra Ryndak's, who faced eviction despite loan usage for back taxes and wages, highlight the difficulties borrowers face.

  6. Payment Flexibility: The SBA offers options like deferring payments and hardship plans, but ultimately, borrowers are responsible for repayment, unlike forgivable PPP loans.

  7. Seeking Relief: Some borrowers like are applying for hardship reductions, but the process remains burdensome for many struggling businesses.

  8. Navigating Solutions: The SBA is reassessing its programs to support small businesses and is open to individual arrangements, but broader forgiveness programs require congressional action.

U.S. seeks to collect $20 billion in delinquent COVID loans
COVID Hit Small Businesses Particularly Hard



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By retaining Mark Sullivan Consulting, taxpayers can benefit from personalized guidance tailored to their unique financial situations and tax challenges. From preparing unfiled tax returns to negotiating settlements with the IRS, Mark Sullivan Consulting provides comprehensive support every step of the way. With a commitment to integrity, transparency, and excellence in service, Mark Sullivan Consulting empowers clients to navigate IRS compliance initiatives with confidence and peace of mind.


About the author

Mark W. Sullivan, EA founded Sullivan Consulting in 1998 in St. Louis, MO and relocated to Scottsdale, AZ in 2020. He specializes in federal tax controversy representation, appeals and consulting on behalf of individuals, businesses, law, and accounting firms nationwide. In addition, he has served as the consulting and expert witness in numerous civil and criminal cases in multiple federal district courts.

Mark has an unlimited Enrolled Agents license and is admitted to practice before the Internal Revenue Service based on his extensive experience as a Revenue Officer in New York, NY, St. Louis, MO and Washington, D.C.


 

Reference: "U.S. Seeks to Collect On Up To $20 Billion In Delinquent COVID Loans", Ruth Simon, The Wall Street Journal, March 7, 2024


Copyright 2024 Mark Sullivan Consulting, PLLC.


Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.

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