WASHINGTON – Computer errors have caused the government to hand out double loans to thousands of borrowers under the Trump administration’s program to save businesses from the economic devastation of the coronavirus pandemic.
While the salary protection program was under fraud, the revelations in a new report by the Inspector General of the Small Business Administration rather speak of a faulty and costly implementation.
Aging of federal technology could hamper and hinder the SBA’s inability to track loans. Two years ago, the government’s accountability office found that information systems across the federal government were very outdated. The investigation found that some computer hardware at the SBA was a decade old.
A series of mistakes occurred in the spring and summer of 2020, leading to millions of taxpayers being accidentally handed out as double loans. In total, SBA Inspector General Mike Ware found that banks were authorized to issue PPP loans, “made more than one PPP payment to 4,260 lenders, amounting to approximately $ 692 million and 8,731 PPP loans. loans. “
Businesses were allowed to apply for PPP loans at various banks; it was the SBA’s duty to ensure that if a borrower has an application before one bank, applications before other banks are withdrawn. If the SBA has not warned a bank that one of its prospective lenders has other outstanding applications, the borrower will have no barrier to obtaining multiple loans.
At least 104 borrowers received three or more loans. One borrower received 17 loans from the federal government, for a total of $ 1.3 million. It was not clear who the recipient of 17 loans was or how the borrower could manage to obtain so many loans when other prospective borrowers struggled through the business rescue program to win a single grant.
An official at the office of the SBA Inspector General did not want to disclose information about the borrower, or whether the borrower is being investigated by the agency. The official did confirm to Yahoo News that the 17 loans were not separate chains of a large chain, in which case the loans would meet the program’s guidelines.
The SBA tried to recover some of the double loans, but could not tell its inspector general to what extent he had succeeded in recovering funds.
The SBA did not want to elaborate on the findings of the Inspector General. “We have nothing left,” spokeswoman Carol Wilkerson told Yahoo News in a text message.
The revelations about widespread problems with the initial round of PPP loans come as President Biden and Vice President Kamala Harris tour the country around the recently passed $ 1.9 billion US bailout plan, which has its own business component, including a new $ 28.6 billion fund to help restaurants.
Congress also intends to extend the PPP by another two months, giving businesses more time to apply.
The logistical challenges that apparently frustrated the previous government could also plague the current problem, although the SBA said the problems highlighted by the Inspector General have been resolved. The prospect of big mistakes lies ahead when large sums of money are paid out, regardless of who the president is. The Obama administration’s Troubled Asset Relief program, which was intended to save the U.S. economy after the 2007-08 financial crisis, has undergone similar investigations.
Critics of the Trump administration have seized on the new report as evidence of how much damage the 45th president managed to inflict on the federal government before he left office in January. “This money was meant for mom-and-pop small businesses struggling to keep the lights on, not big businesses, grippers and cheats,” said Kyle Herrig, head of watchdog group Accountable.US. “But given the Trump administration’s insistence that banks and companies self-regulate, it’s no surprise that so much fraud and sloppiness has slipped through the cracks.”
Defenders of Trump’s aid to small businesses say the goal was to move billions of dollars at unprecedented speeds to thousands of businesses, amid a pandemic. Mistakes were inevitable, the defenders say, and are no evidence of abuse or incompetence.
The double loans in question were made between April and August 2020, when the Trump administration first implemented the PPP program, which was initially allocated $ 349 billion by Congress in the coronavirus bill.
At one point on April 30, an SBA computer quickly processed large amounts of loans that were wrong. The malfunction prevented the system from checking when a company applied for a loan from more than one bank. When the computer script was working well, each PPP applicant left a single loan for the 5,460 participating banks.
The error persisted for approximately 14 hours before SBA officials noticed and corrected the code in question. Because the SBA was facing a large backlog of applications, officials there decided not to go back to any duplicate loan applications processed during the 14-hour period. This means that thousands of applicants had an extra opportunity – or in some cases a few extra opportunities and in one case 17 extra opportunities – against funds that others did not have.
There was another bug, this is related to an SBA computer program known as E-Tran. The program was supposed to eliminate duplicate loan applications by comparing tax identification numbers and other information submitted by businesses. For thousands of applicants, E-Tran could not realize that a business had submitted more than one application.
In total, the federal government made 5.2 million PPP loans; the 8,731 duplicate loans are an outlier. However, the ease with which some lenders see their happiness double stands in stark contrast to the experiences of many coloreds who own businesses, who said they were marginalized and did not give the same credit knowledge as white business owners. The analysis of PPP loans supported such accusations.
The Biden government has promised to redress racial and other inequalities when it comes to issuing small businesses, but they will have to work with more or less the same technological infrastructure as Trump did. (The SBA has promised not to use bulk processing programs again.)
Ware’s investigation was commissioned by a congress for the coronavirus subcommittee. The subcommittee’s chairman, James Clyburn, a representative of the DS.C. most needy small businesses. ‘
Cover Thumbnail Illustration: Yahoo News; Photos: AP, Getty Images
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