- House Democrats said in a Tuesday memo that early analysis of Paycheck Protection Program loans shows funds at risk for fraud and abuse.
- More than $US1 billion in relief funds were made to firms receiving multiple loans, the group said. The program set a one-loan limit for participating businesses.
- More than 600 loans collectively worth $US96 million went to companies excluded from doing business with the government, they added.
- Such missteps are due to the Treasury and Small Business Administration only reviewing loans larger than $US2 million, the Democrats wrote. The policy only covered 0.6% of the 5.2 million PPP loans, according to the memo.
- In a separate memo, Republicans on the coronavirus response subcommittee praised the program as a “resounding success.”
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Preliminary analysis of loans made through the Paycheck Protection Program shows billions of dollars of relief funds at high risk for fraud and abuse, House Democrats said in a Tuesday memo.
Roughly $US670 billion in emergency economic relief was made available to small businesses through PPP this year. At the time of the program’s expiration on August 8, more than 5.2 million loans had been approved by the Small Business Administration.
The loans provided critical aid to millions of companies, but tens of thousands of loans “could be subject to fraud, waste, or abuse” due to a lack of oversight, members of the Select Subcommittee on the Coronavirus Crisis wrote. The Treasury and SBA only committed to reviewing PPP loans larger than $US2 million. The policy only leaves 0.6% of loans under close scrutiny, according to the committee.
To start, the committee says more than $US1 billion in PPP funds went to firms receiving multiple loans. The program was meant to prohibit companies from receiving more than one loan. Yet more than 10,856 loans went to repeat borrowers, and under the Trump administration’s current review guidelines, just 65 loans are subject to closer scrutiny, the members said.
More than $US96 million split across 600 loans went to companies excluded from doing business with the federal government, the committee added. A collection of more than 350 loans worth $US195 million went to government contractors with “significant performance and integrity issues.”
Congress set aside hundreds of billions of dollars for PPP with the intention of aiding small businesses through the coronavirus recession, but the lack of thorough oversight knocked the program’s efficiency, committee members wrote.
“The Subcommittee staff’s analysis suggests a high risk that PPP loans may have been diverted from small businesses truly in need to ineligible businesses or even to criminals,” they added.
Republican members of the subcommittee held a different stance, calling the program’s rollout a “resounding success” in their own report released Tuesday. The group praised the administration for its “fast and efficient work” and said the program “may have prevented an apocalyptic scenario for American small businesses.
The subcommittee’s investigation is ongoing, and members noted they still hold concerns regarding whether PPP loans “favoured large, well-funded companies over struggling small businesses.”
The memos arrive one week before the Senate is scheduled to reconvene after an August recess. Economists and investors anticipate stimulus negotiations to continue despite little progress being made on a new spending bill before the break.
Most recently, House Speaker Nancy Pelosi dropped Democrat’s proposal to a $US2.2 trillion package, while White House chief of staff Mark Meadows said the president would sign a $US1.3 trillion deal, up from a previously floated $US1 trillion bill.
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