Currently, many individuals and businesses are in financial distress. Not only has the pandemic been difficult on them mentally and emotionally, but also financially. Although new government incentives bring with them the promise of funds, these new programs are technical, confusing, and constantly changing.
Since individuals and businesses are feeling overwhelmed by these programs, there are individuals taking advantage of this situation by offering to help small businesses for a price. Many of these individuals offering help are scams or frauds.
Tips for Avoiding SBA COVID-19 Scams
Here are tips to consider before paying for help from individuals that may be frauds:
These programs are new. The Treasury Department and the SBA are still in the process of creating and developing them. You should be suspicious of anyone saying they have a lot of experience with these brand-new programs.
Because these programs are new, we don’t know how they will work. Be suspicious of anyone promising or guaranteeing a result. How can anyone guarantee an outcome when the specifics of the program are not yet known? Once the program is up and running it is likely to change and adapt as the government agencies learn how to streamline the program and decide how they want to best allocate resources.
These programs are likely to take longer to roll out than expected. Once they are in place there may delays and issues. Be suspicious of anyone that is promising set timelines.
These government programs are going to be audited and reviewed. Any information you submit is being submitted to the federal government. Do not be pressured into exaggerating or fudging numbers. Doing so can subject you to criminal and civil penalties if caught.
There are rumors surrounding all of these programs. There are stories of people getting unconscionable amounts of money or getting their money faster than others. If it sounds too good to be true it probably is not true. Get your information from reliable sources like https://www.sba.gov/ or https://home.treasury.gov/.
If you are hiring a firm to help you with your loan and grant applications or your Employee Retention Tax Credit (ERTC), it is appropriate for them to charge you a fee to cover their time, expenses, and expertise. We have heard of companies offering to help based on a percentage of funds received, with some charging as much as 30%. For example, if a business were to get a loan for $100,000, it would owe the firm $30,000 for the work. The usable funds are reduced to $70,000, while the borrower still has to repay the government the entire $100,000.
LaSusa & Deb, PLLC is here to be a resource for our clients and for the fellow members of our community. Do not hesitate to give us a call at 214-584-6505.