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Small businesses still locked out of COVID-19 disaster aid program

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Posted at 10:41 AM, Nov 24, 2021
and last updated 2021-11-24 10:41:48-05

Since the pandemic, business for Emily Reid hasn't been so hot. 

"It's just been very slow," she said.

Her family owns Spagnvola Chocolatier in Maryland. 

"We make our own chocolate," Reid said. "We sell truffles bonbons, we have bars."

They've been trying to get a COVID-19 Federal Disaster Loan for 10 months now. 

"With this money from the loan, we'll be able to get out of a lot of the debt that we're in," Reid said. "Also, hiring staff for our upcoming season, where the demand for our chocolate is going to be super high."

Spagnvola is among businesses Newsy found this year trying to fix the government's own errors holding up their pandemic loans and grants from the small business administration.

In the spring, Newsy discovered aggressive new anti-fraud systems incorrectly flagging legitimate applications. The SBA had rejected people for failure to pay child support when they'd never had a kid. Others were declared dead because their employer ID matched the social security number of someone who died. 

Now, time's running out to clear up remaining government goofs. 

The SBA is winding down its coronavirus aid program despite an undisclosed number of applicants, like Spagnvola, still fighting to get funds. 

The Reid family can't get a disaster loan because the SBA mistakenly doesn't think they filed their 2019 taxes. 

It's a known snag affecting businesses, like Spagnvola, that filed amended tax returns.  

At a recent Congressional hearing, SBA administrator Isabella Casillas Guzman said shops like Spagnvola should keep pressing the IRS to get the paperwork they need. She acknowledged that can take months. 

"Unfortunately ... processing times. They're going to need to coordinate closely with the IRS and make sure their documents are in order," Guzman said.

The SBA did not have a count of businesses blocked by the tax issue but it’s enough to alarm Congress. 

"We are getting a ton of complaints in our office right now where people...I absolutely support the anti-fraud measures but also want to make sure we are able to get things done for the small businesses," Rep. Carolyn Bourdeaux said.

Most have received the relief they requested. 

The SBA has granted more than four million COVID-19 disaster loans and grants worth $305 billion. 

The agency won't say how many claims are still in the pipeline. 

Businesses have until Dec. 31 to apply for aid and for places like Spagnvola, six months to appeal a denial. 

"Unfortunately, without this loan, we might have to end up closing our shop," Ried said.

Emily Reid is hoping the government comes through before it's too late. 

This story was originally published by Patrick Terpstra at Newsy.