Fraud and scams have been on the rise in recent years, and the COVID-19 pandemic has put businesses at even greater risk. The most recently reported fraudulent activity targets Small Business Administration (SBA) loan recipients. Businesses have reportedly received an Economic Injury Disaster Loan (EIDL) statement for a loan they did not apply for.
The EIDL program is offered by the SBA to provide economic relief to small businesses and nonprofit organizations that experience a temporary loss of revenue. It was another relief option, in addition to the Paycheck Protection Program (PPP), available to small businesses that lost revenue due to COVID-19.
If your business has received an EIDL statement but you did not apply for or receive an EIDL loan, it’s probably fraud. Most likely, fraudsters applied for EIDLs with the SBA, and were able to receive loan advances for up to $10,000 using businesses’ tax ID numbers.
If you have been a victim of this fraud and are also a PPP loan recipient, this will be problematic when the final loan forgiveness amount is determined by the SBA. If an advance on an EIDL in your name was processed by the SBA, that dollar amount will be deducted from your PPP forgiveness amount and will be due to your loan provider. Your bank does not have visibility into your disaster loans because EIDL agreements were processed directly between the business and the SBA.
To proactively ensure that you were not the victim of this fraud, contact the SBA Disaster Assistance hotline at (800) 659-2955 to speak with the SBA and find out if an EIDL has been processed in your name.
At Enterprise, the PPP forgiveness process is now open for all loans over $50,000. A link to the forgiveness application has been sent to all borrowers with loans over $50,000. If your loan is for $50,000 or less, you have the benefit of completing Form 3508S, a shorter and simpler form. We are not yet accepting Form 3508S applications. Once we are, Enterprise borrowers will receive an email from Enterprise with a link to the forgiveness application along with instructions.
As a reminder, always scrutinize email requests for funds transfers and verify if any requests are out of the ordinary. Confirm requests for transfers of funds by using phone verification with previously known numbers, not the numbers provided in the email request. In the case of the fraudulent activity described above, log in directly to your SBA account or contact the SBA using the methods published on its website.
Read our blog to learn more about SBA PPP loan forgiveness, and visit the SBA directly to learn more about the EIDL program.