Report: Billions In SBA Loans May Have Been Fraud

According to the Small Business Administration’s inspector general, the agency had no measures or plans in place to address billions of dollars in fraud in the Paycheck Protection Program (PPP).

Inspector General Hannibal Ware claimed that the SBA lacked the organizational structure required to combat potential fraud in the Paycheck Protection Program. Under the program, the federal government granted forgivable loans to many businesses that kept their staff during the pandemic.

The report, published on Thursday, revealed that even though the SBA tried changing its loan review process many times, the agency was still unable to find ways to tackle loan fraud.

The report also stated that SBA did not primarily set up any centralized entity or wing to manage and counter the risk of fraud.

Business owners looking to receive loans through the program, applied for it through the Small Business Administration. The agency then assigned the task of approval and distribution of the funds to its certified lenders.

The report noted that around 5,500 private lenders received nearly $800 billion in loans under the program. However, experts believe that around $80 billion or more may have been fraudulent loans. While talking with NBC News, Former U.S. Attorney Matthew Schneider said that it is one of the biggest frauds the generation has seen.

The Department of Justice has indicted many who have been connected to PPP fraud, including a person who received $27 million using fake loan applications. According to the Free Beacon, labor unions also received more than $36 million in loans which they weren’t even eligible for.

Many agencies and politicians have been trying their best to make sure the PPP fraud issue gets addressed. In recent months, many Republicans on the House Committee on Small Business were frequently sending letters to SBA administrator Isabella Guzman, inquiring how the agency plans to address the PPP fraud loans.

The committee’s senior member Rep. Blaine Luetkemeyer (R-MO) feels that this new report has only confirmed his suspicions about the SBA’s incompetence.

He told the Free Beacon that under the Biden administration, the SBA has completely failed to counter the loan fraud, as a result the American taxpayers and small businesses are getting hurt.