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PPP and SBA Loan Fraud and Mismanagement: The Truth
One year after Bob Kleinschmidt applied for loan forgiveness, Bank of America stepped in.
According to him: “Bank of America is now saying that I was overfunded for the loan at the time because I included [rent, utilities, business expenses and health insurance] in the calculation.”
Kleinschmidt learned that the bank would only forgive the payroll portion of the loan, $20,833. He was on the hook for about $6,800, and last week he received a statement saying he was in default.
So basically, Bank of America approved a PPP loan that covered all of his pay and his expenses. However, for some unknown reason, the bank changed its mind about what it would potentially forgive.
This is incredibly frustrating, obviously. Here’s what a representative of Bank of America said…
Apparently, sole proprietors are only eligible for payroll coverage up to the amount specified in the rules. If you made $100,000 or more before the pandemic, it would be about $20,833.
On top of that, business owners are responsible for getting their own numbers right and not the bank. If the amount requested was not accurate, the bank cannot forgive the loan.
The outstanding balance would have to be paid back over five years at 1% annual…