- The Paycheck Protection Program distributed more than one loan to more than 4,000 lenders in 2020.
- From April to August, a watchdog issued approximately 8,731 duplicate loans amounting to approximately $ 692 million.
- Of the 4,260 lenders, 2,689 have the same tax ID and 1,571 the same name and address.
- See more stories on Insider’s business page.
The Salary Protection Program was established under the CARES Act to provide assistance to small businesses suffering during the pandemic. But it turns out it provided too much help.
A report released by the Office of the Inspector General of the Small Business Administration on Monday states that of the PPP loans approved from April 3 to August 19, borrowers made more than one loan disbursement to 4,260 borrowers. : 2,689 with the same tax ID number and 1,571 with the same business name and address.
The disbursements involved 8,731 loans and amounted to approximately $ 692 million, according to the report.
The SBA said in the report that it would resolve duplications by recovering improper payments and preventing lending forgiveness on duplicate loans. This means that small businesses have to repay the double loans if they can.
According to the report, the SBA identified issues in 2020 that caused duplicate loan applications to be processed. According to the report, the SBA said that the controls for its electronic loan application system have been eliminated and that they will rely on loan reports to eliminate duplicates.
“Establishing strong controls to prevent improper or double payments during initial loan processing is more effective than identifying and resolving improper payments during the loan review phase,” the report said. “SBA’s efforts should focus on protecting funds, as it is wiser and more effective to prevent a loan from taking place than to recover funds after the loan has been disbursed.”
The OIG recommends that the SBA:
- Review the potential duplicate loans identified by the OIC and recover improper payments.
- Review checks related to PPP loan reviews to ensure that duplicate loans are not forgiven.
- Strengthen the controls in the SBA’s loan service portal for future PPP-type programs.
- Strengthen control and guidance for lenders to ensure it meets program requirements.
The House Select subcommittee on the Coronavirus crisis has requested that the OIG review the vulnerabilities in the SBA’s loan processing system.
The PPP faced other issues shortly after it was implemented last March. In one case, fast food chain Shake Shack received a $ 10 million loan, even though the loans were intended for businesses with 500 employees or less. Shake Shack finally returned the money.
Lawmakers are advocating for the program and stressing the importance of helping small businesses recover financially from the pandemic. The $ 1.9 billion stimulus bill signed by President Joe Biden on Thursday set aside billions of dollars for small businesses, with $ 7.25 billion used specifically for the EMP.
The House Small Business Committee on Thursday introduced legislation to expand the PPP – which will expire on March 31 to May 31.
“The demand for PPP loans is currently a testament to the effectiveness of the program and the long-term consequences of this pandemic,” said Rep. Nydia Velázquez, chair of the committee, in a statement. “That’s why we can not stop the aid now and this short – term extension is so important.”