Hey everyone, Jason here, founder of Distressed Loan Advisors. If you want to book time with me, please click here.
Alright, now let’s dive in. Today, we’re talking about the Complete COVID Collections Act, which is currently being proposed. It hasn’t been signed into law yet, but I was able to get my hands on a draft.
The Big Takeaway
- Bad news: There’s no mention of forgiveness or an offer in compromise.
- Good news: There doesn’t seem to be anything particularly aggressive or punitive toward the majority of borrowers.
Now, let’s break down the key provisions.
1. Mandatory Loan Collections
The proposed bill prohibits suspending collections on COVID-19-related small business loans, including EIDL. This isn’t a huge change since the SBA is already actively collecting.
The bill also reinforces the rule that delinquent EIDL loans under $100,000 must be referred to the Treasury for collection—something they were already doing.
Frankly, this part feels more like political grandstanding than a real policy shift. Loans under $100K, especially those tied to legal entities without personal guarantees, are notoriously difficult to collect. Most small business owners in this category likely don’t have assets worth pursuing.
2. Treasury’s Authority to Suspend Collections
This is an interesting one—the Treasury has the final say on whether to continue, suspend, or end collections on EIDL loans. That could mean they recognize that chasing down certain loans isn’t worth the effort. Hopefully, common sense prevails here.
3. Fraud Investigations Extended Until 2030
If you didn’t commit fraud, this part doesn’t affect you. The bill extends the Special Inspector General for Pandemic Recovery (SIGPR) until 2030 to oversee fraud investigations.
It also mandates cooperation between the SBA and the Inspector General, which likely means some interagency squabbles needed to be resolved.
Additionally, there will now be a 10-year statute of limitations for prosecuting COVID-related fraud across programs like EIDL, PPP, the Restaurant Revitalization Fund, and the Shuttered Venue Operator Grant.
4. Transparency and Reporting
The bill pushes for more transparency by requiring:
- Monthly briefings from the SBA to Congress about collection efforts.
- Annual testimony about collections, improper payments, and compliance.
- DOJ reporting on fraud prosecutions.
- A public website tracking recovered COVID relief funds in real-time.
Not exactly groundbreaking, but it ensures Congress stays in the loop.
5. Increased Scrutiny on SBA Programs
The bill also:
- Requires the SBA to justify improper payments and take steps to recover them.
- Expands law enforcement tools to go after fraudulently obtained COVID loans.
Again, this isn’t new—people are already getting indicted for fraud. If you took out a legitimate loan and just couldn’t pay it back, this doesn’t impact you.
What’s Missing?
The elephant in the room—there’s no mention of forgiveness, offers in compromise, or a real plan to address the mountain of delinquent loans.
Yes, they want to collect, but what about small business owners who didn’t commit fraud and simply can’t afford their payments? Right now, there’s no relief for those borrowers. Maybe something will come down the line, but for now, this bill isn’t offering any solutions.
Final Thoughts
That’s the gist of the Complete COVID Collections Act as it stands. It’s not law yet, but this is what’s being proposed.
See you in the next one!
