SBA Horror Stories

I applied for an EIDL loan increase in June 2024 after my restaurant survived COVID but needed capital to expand. For 18 months I heard nothing. No updates, no responses to my emails, no returned phone calls. I called the SBA customer service line 47 times over that period. Each time I was told my application was "in processing."

Then in December 2025, I finally received a response: DENIED. The reason? "Insufficient documentation." The documentation they claimed was missing? The same tax returns I had uploaded to their portal three separate times, with confirmation emails I still have. When I tried to appeal, I was told the appeal window had already closed because they counted from the date they "internally processed" my application, not the date they notified me.

I lost the expansion opportunity. I lost $180,000 in projected revenue. I had to lay off two employees. All because the SBA couldn't be bothered to check their own email system.

I was approved for a $150,000 SBA disaster loan after my business was affected by the 2024 Arizona floods. I received an approval letter, signed the closing documents, and was told funds would be disbursed within 10 business days.

30 days later, nothing. I called and was told there was a "technical issue." 60 days later, I was told my loan had been "reassigned" because of a clerical error. Apparently, someone at the SBA processed the funds to a completely different business with a similar name in a different state. When I demanded they fix it, I was told I would need to "reapply" because the funds had already been disbursed.

The kicker? The business that received my money doesn't even exist anymore - they closed in 2023. The SBA sent $150,000 of taxpayer money to a defunct business, and their solution was to make me start over from scratch.

I applied for a small business loan through an SBA-approved lender. The lender approved me, but the SBA's verification system flagged my application for "additional review." The reason? My business address didn't match their records because I had moved offices six months prior and updated everything with the IRS, state, and the SBA's own system.

What followed was four months of bureaucratic torture. They asked me to verify my address. I did. They asked again. I did again. Then they claimed my documents were "unreadable" - the same PDFs that the lender, IRS, and everyone else had no trouble reading. I sent them again in different formats. They claimed they never received them.

Finally, after spending over $3,000 on notarization fees, certified mail, and legal consultation, my application was approved. But by then, I had missed my funding window and had to take a much worse deal from a private lender at triple the interest rate.

I spent three weeks carefully filling out my SBA loan application. I uploaded all 47 required documents. I triple-checked everything. I submitted and received a confirmation number.

Two weeks later, I logged in to check my status. My entire application was gone. Not denied. Not processing. GONE. The portal showed no record of my application ever existing. My confirmation number didn't work. The customer service line said they had no record of my business in their system - despite the fact that I had received an SBA PPP loan in 2020 through the same system.

I had to start completely over. But now the portal wouldn't let me create a new application because my EIN was "already associated with an existing account" - the account that supposedly didn't exist. I was trapped in a paradox that took 11 weeks to resolve. By then, the loan program I was applying for had closed.

I worked at the SBA for 6 years before I couldn't take it anymore. What I saw would shock most Americans. Applications sitting in queues for months because there was no system to assign them. Emails from desperate business owners marked "read" and never responded to. Managers telling us to "clear the backlog" by denying applications with any minor discrepancy rather than requesting corrections.

The fraud department was a joke. I personally flagged over 200 suspicious applications during COVID relief - applications from addresses that didn't exist, from people claiming to own businesses in states they'd never visited. Maybe 10 were ever investigated. The rest were approved because there was pressure from above to move money quickly.

Meanwhile, legitimate business owners got stuck in verification hell while fraudsters walked away with millions. When I complained to management, I was told my "negativity" was affecting team morale. I resigned. This system is broken beyond repair.