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Music Business Owner On The Hook For $36,000 She Can’t Afford After Mixup With PPP Loan; I Feel That I Was Misled’
CBS Chicago ^ | March 19, 2021 | Tara Molina

Posted on 03/22/2021 12:17:28 PM PDT by nickcarraway

A woman who took out a loan trying to save her small business during the pandemic now says that loan could cause her to shut down.

The owner just found out she owes thousands more dollars than she expected.

CBS 2’s Tara Molina is Working for Chicago, helping people navigate these challenging times. She reports that owner says she just can’t afford to pay it all back.

She’s on the hook for $36,000 today. Money she says she doesn’t have, and can’t be forgiven, all because of what she calls bad communication with the bank she turned to for help.

Amy, who wasn’t comfortable sharing her last name, built Yazz Jazz Music and Productions from the ground up.

“My business specializes in providing musicians, DJs, and bands for live events and weddings, social events,” she said.

When the pandemic hit, her business crumbled overnight. Forced to cancel more than 60 events, Amy said she turned to the Small Business Administration for help back in April, applying for a PPP loan through Bank of America.

“I was called by a banker from Bank of America who walked me through my application,” Amy said.

She got about $38,000 from the Paycheck Protection Program; money she says she set aside to pay her team through the cancellations.

Amy checked in with Bank of America for months regarding forgiveness of the loan.

Then, the call that led to her call to CBS 2.

“A couple days ago, they called me to notify me that they made an error, and that I was only qualified to receive $2,000 in forgiveness, and that I would have to pay back that $36,000,” Amy said.

CBS 2 reached out to Bank of America and the SBA to find out why. They said they can’t speak to specific cases like Amy’s, due to privacy laws, but said payments made to contractors don’t meet SBA requirements for loan forgiveness.

“We processed Paycheck Protection Program loans based on loan amount requests and representations made by businesses. In the forgiveness process, we are required to follow SBA rules about what expenses qualify to be forgiven,” Bank of America spokesman Bill Halldin said in an email. “Certain expenses, such as payments made to contractors, do not meet the requirements for loan forgiveness. In those instances, the loan continues at the SBA-established interest rate of 1 percent.”

Amy claimed the issue of payments to contractors, like her musicians, never came up when she walked through the process.

“I feel that I was misled,” she said.

After a year without music, this could be the end for her company.

“There is no way I would ask my team to pay me back that money. They used it to feed themselves and their families,” she said. “There’s no way I’m going to be able to pay that back. The money is gone.”

A spokesperson for the SBA deferred to Bank of America as the lender here, but said it’s up to the borrower to certify their loan eligibility.

The SBA’s frequently asked questions website also features two questions relevant to Amy’s case:

Question: Are lenders required to make an independent determination regarding applicability of affiliation rules under 13 C.F.R. 121.301(f) to borrowers? Answer: No. It is the responsibility of the borrower to determine which entities (if any) are its affiliates and determine the employee headcount of the borrower and its affiliates. Lenders are permitted to rely on borrowers’ certifications.

Question: Should payments that an eligible borrower made to an independent contractor or sole proprietor be included in calculations of the eligible borrower’s payroll costs? Answer: No. Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business’s payroll costs. However, an independent contractor or sole proprietor will itself be eligible for a loan under the PPP, if it satisfies the applicable requirements.

Amy has reached out to Congressman Brad Schneider for help; but is hoping, in some way, speaking out helps others.

In a statement, Schneider’s office said, “Constituents with problems gaining access to services provided by the federal government, whether it is the SBA’s PPP program or a problem with Social Security, the VA (Veteran’s Administration) or otherwise, are encouraged to call Congressman Schneider’s office to work with our federal caseworkers who can help resolve your issue.”

CBS 2 is committing to Working For Chicago, connecting you every day with the information you or a loved one might need about the jobs market, and helping you remove roadblocks to getting back to work.

We’ll keep uncovering information every day to help this community get back to work, until the job crisis passes. CBS 2 has several helpful items right here on our website, including a look at specific companies that are hiring, and information from the state about the best way to get through to file for unemployment benefits in the meantime.


TOPICS:
KEYWORDS: covid19; loan; ppp; sba
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"In those instances, the loan continues at the SBA-established interest rate of 1 percent.”

Pay off your nearly-free money, mooch.

21 posted on 03/22/2021 12:50:13 PM PDT by StAnDeliver (Eric Coomer of Dominion Voting Systems Is The Blue Dress)
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To: monkeyshine
"In reality this borrower needs to file 1099 reports on payments to contractors. Could raise a red flag for the workers if anyone is looking."

That was my thought -- this mooch is begging for a hard audit.

22 posted on 03/22/2021 12:52:19 PM PDT by StAnDeliver (Eric Coomer of Dominion Voting Systems Is The Blue Dress)
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To: ready2brd

We have a private school, which is where the funds were spent.

So we pay a pretty good chunk of taxes. The church staff were not covered for it.

But just about every non profit that had staff (and I know more than a handful) had PPP loans. Some had multiple, though the rumors are they are getting hammered for it (a camp has a retreat center, and doubled dipped on paying staff for both).

My company was pushing for us to do it, but since we didn’t shut down (essential), my boss was able to successfully argue we don’t need it.


23 posted on 03/22/2021 1:08:54 PM PDT by redgolum (If this culture today is civilization, I will be the barbarian)
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To: nickcarraway

Schadenfreude. Get used to it democrats. The only thing a government can do to help you is to leave you alone.


24 posted on 03/22/2021 1:09:15 PM PDT by blackdog (Joe Biden, Deep State Cuckold.)
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To: Jane Long
"

I was wondering when this carp would start happening, with these PPP loans."

Agree. It all sounds fishy to me too.

25 posted on 03/22/2021 1:17:14 PM PDT by Rocco DiPippo
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To: nickcarraway

I would be willing to bet she spent the majority of money on designer clothes and handbags and other worthless crap that women buy.


26 posted on 03/22/2021 1:17:48 PM PDT by unixfox (Abolish Slavery, Repeal the 16th Amendment)
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To: kingu

Ha, she’d be screaming to get that 36K bill back...


27 posted on 03/22/2021 1:22:35 PM PDT by larrytown (i like pie)
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To: redgolum

That makes more sense. Definitely a different case than Osteen getting $4.4M from PPP. What a scam.


28 posted on 03/22/2021 1:23:07 PM PDT by ready2brd
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To: nickcarraway
The lovely Amy Yassinger.

Not guilty...but really guilty.


29 posted on 03/22/2021 1:25:48 PM PDT by newfreep (“Leftism, under all of its brand names, is a severe, violent & evil mental disorder.”)
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To: larrytown

It’s amazing how you can tell the difference on here between people who have written the checks and those who have collected the checks.


30 posted on 03/22/2021 1:47:44 PM PDT by kingu (Everything starts with slashing the size and scope of the federal government.)
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To: nickcarraway
From the selected FAQ: " Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business’s payroll costs."

That is pretty clear to me, but I am a retired accountant and working through employee/contractor issues is second nature. If the business owner asked a bank employee how to sort out which is which, the bank employee should have been well versed in what the difference is.

On the other hand, a lot of small business owners wade through the government forms and make mistakes. The FAQ answer could have stated (as an example) " If you pay somebody on a W-2, that counts as payroll. If you pay them on a 1099, that does not count." That would explain it to more business owners, but probably not every one of them who applied for a loan. If the business owner in the article had called my office, we would have used the 1099 or W-2 example.

Ultimately, the business owner is responsible for the loan and complying with the requirements. Not a pleasant answer, but this time of year accountants with small business clients have to hand out a lot of bad news.

31 posted on 03/22/2021 2:09:41 PM PDT by Bernard (“When once the guardian angel has taken flight, everything is lost”. – William H. Seward, 1/12/1861)
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To: Jane Long
"And.....did she actually pay these contractors the $$? There should be receipts, for all transactions....maybe the contractors were double paid (by her and their own loans) and may have to pay back."

Jane is exactly right. Not just double-paid, but when you factor the potential UI fraud by the contractors, possibly TRIPLE-paid.

How about a scenario with kickbacks too, so now the bill comes due and she doesn't have a dollar so of course, she runs to the MSM "Whad ayr mah rites? I gots rites.". #facepalm

Meanwhile, some alphabet agency is taking notes, and the mooch doesn't realize they get bonused on taking down people like her.

32 posted on 03/22/2021 2:26:45 PM PDT by StAnDeliver (Eric Coomer of Dominion Voting Systems Is The Blue Dress)
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To: nickcarraway

She can always declare bankruptcy and re-start fresh.


33 posted on 03/22/2021 2:29:54 PM PDT by zek157
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To: nickcarraway

“Just give her the money. The bank can afford it.” < eyeroll >


34 posted on 03/22/2021 2:47:26 PM PDT by OrangeHoof (Chinese communism will look different once the masks come off.)
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To: zek157

Have you seen what Joe Biden did to bankruptcy laws as a Senator?


35 posted on 03/22/2021 2:57:09 PM PDT by nickcarraway
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To: Jane Long
Hopefully, this lady...with the help of the investigative reporter/reporting....will stop this nonsense, stat.

Hopefully this woman will pay the taxpayers back what she owes us.

36 posted on 03/22/2021 3:02:14 PM PDT by PAR35
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To: nickcarraway

Thought that work pertained to credit card debt.

Business debt should be dischargeable? If not she will have to suck it up.


37 posted on 03/22/2021 3:03:19 PM PDT by zek157
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To: StAnDeliver
That was my thought -- this mooch is begging for a hard audit.

I hope for her sake she didn't make any mistakes on her application. That can get folks into really hot water.

38 posted on 03/22/2021 3:04:18 PM PDT by PAR35
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To: nickcarraway

A lot of you posters here are speculating out your a-holes. I will speculate that she broke the law on the PPP. Only distinction is that she didn’t buy a Lamborghini.
Hard luck stories everywhere. Sad, but true.


39 posted on 03/22/2021 3:23:30 PM PDT by Honest Nigerian
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To: ready2brd
Churches don’t pay taxes, and therefore should not have been bailed out with taxpayer funds.

The loans are funneled through employers (even churches) to pay employee salaries. Doesn't matter who paid taxes. Even church employees pay taxes. Without these loans, the unemployment offices would have collapsed, with the unemployment rates double or triple what we already experienced.

40 posted on 03/22/2021 4:18:00 PM PDT by aimhigh (THIS is His commandment . . . . 1 John 3:23)
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