EIDL OPTIONS
I would love your thoughts and comments on the following arguments.
The Overlap: Unlike businesses in other states, Florida’s "recovery" period from COVID-19 was repeatedly reset by major climate events (Hurricanes Ian, Idalia, Helene, and Milton).
• Asset Depletion: Small business owners used their personal savings and EIDL funds to survive COVID-19, only to have their physical infrastructure and customer bases wiped out by back-to-back hurricanes.
• Legal Premise: This creates a situation of "frustration of purpose" or "impossibility." The loan was intended to help businesses survive a specific disaster, but subsequent government-declared disasters made the "survival" intended by the loan statistically and economically impossible through no fault of the borrower.
2. Administrative Inconsistency and "Flip-Flopping"
You noted the shifting stance on selling the loans. This is a powerful point for a lawsuit regarding Due Process and Fair Notice.
• Policy Whiplash: For a long time, the SBA halted collections on loans under $100,000, leading many to believe a settlement or forgiveness program was imminent.
• The "Sale" Confusion: In late 2023 and throughout 2024, the administration vacillated on whether to sell the EIDL portfolio to private collectors or keep it in-house.
• The Argument: The government’s inability to provide a stable, predictable repayment environment caused businesses to make poor strategic decisions (like not filing for bankruptcy earlier or not liquidating). The "flip-flopping" on referral to the Treasury Department (which adds a 30% collection fee) could be argued as "arbitrary and capricious" behavior under the Administrative Procedure Act (APA).
3. Disparate Impact vs. PPP Loans
A class-action suit would likely highlight the inequity between the PPP and EIDL programs.
• Arbitrary Distinction: Both programs were created by the CARES Act to save small businesses. One was 100% forgivable; the other became a 30-year debt trap.
• Equity Argument: Florida’s specific geographic vulnerability means that while a business in a landlocked state might have recovered with EIDL, a Florida business couldn't. This creates a "disparate impact" where the EIDL program fails to provide equitable relief to businesses in high-risk disaster zones.
4. The "Best Interest of the Taxpayer" Rebuttal
The SBA and Treasury argue that they must collect to protect taxpayer interests.
• Counter-Argument: Aggressive collection from Florida businesses—already reeling from hurricanes—will lead to mass bankruptcies.
• Economic Reality: If the SBA forces thousands of Florida businesses into closure, the loss of tax revenue, increased unemployment claims, and the collapse of local economies will cost the taxpayer significantly more than loan forgiveness would.
Strategy for a Class-Action Lawsuit
To get a class action moving, a legal team would likely look for:
- A Representative Plaintiff: A Florida business owner with a clean record, who used EIDL funds appropriately, but whose business was physically destroyed or economically crippled by Helene/Milton.
- Injunctive Relief: Seeking a court order to stop the SBA from referring Florida-based EIDL loans to the Treasury (and the 30% penalty) until a "Hardship Forgiveness" assessment can be made for disaster-stricken areas.
- Discovery: Forcing the SBA to reveal their internal "flip-flop" memos regarding the loan sales, which could prove they knew the portfolio was uncollectible but failed to provide a relief path.
Immediate Practical Steps
While the legal battle brews, you can leverage existing programs:
• Hardship Subsistence Plan: The SBA offers a "Hardship Accommodations Plan" where you can pay as little as 10% of your payment amount for six-month intervals.
• Offer in Compromise (OIC): If your business has closed, you can submit SBA Form 1150 to settle the debt for less than you owe, though this is historically difficult for EIDL.
• Congressional Pressure: Florida's representatives are particularly sensitive to the hurricane/COVID overlap. Collective lobbying for a "Florida EIDL Relief Act" is often faster than a lawsuit.