CFO Slice

Ampac USA, a skincare-products company, finds itself in a financially burdensome situation after defaulting on a $500,000 loan obtained during the pandemic to sustain its operations. Despite making substantial repayments totaling $425,000, Ampac has been notified that it still owes approximately $262,000 due to a 30% collection fee applied after the loan defaulted. This fee, which was added when the loan was transferred to collections, is a standard practice for the U.S. Treasury but not clearly detailed in the initial loan documentation. The issue underscores broader challenges within the COVID disaster loan program, which has provided significant financial support to small businesses during the pandemic through the Small Business Administration (SBA). However, many businesses, including Ampac, have struggled or failed to meet the repayment terms, leading to a substantial number of loans being referred to the Treasury for collection. The process has introduced additional financial burdens on businesses due to significant collection fees and the accrual of interest. The situation with Ampac highlights the harsh realities of federal debt collection practices and the ongoing debate over the fairness and transparency of imposing high collection fees on already struggling businesses.