Watchdog calls for crackdown on small business loan program fraud

The GAO said the SBA failed to provide critical information for its review, including a detailed description of the loan data, and that it took several weeks to discuss investigators’ questions.

The watchdog insisted on pointing to SBA for lack of cooperation.

“Most agencies have generally been able to provide GAO with quick access to the information for this report while fulfilling their responsibilities during this unprecedented national crisis,” he said.

In a response letter included in the report, the SBA said it produced more than 420 pages of documents to GAO in May and made senior officials available for three and a half hours of interviews.

The SBA said it “had never refused to provide data to GAO,” but that there had been initial confusion about what GAO was looking for. The SBA said GAO did not indicate until June 1 that it wanted data on individual loans similar to that published by the SBA on its flagship loan program 7 (a).

“SBA can’t just take a used spreadsheet out of a [Freedom of Information Act] website for traditional loan programs and populate it with information on PPP loans, ”the SBA said. “PPP loans involve concerns about borrower privacy and confidential, proprietary or commercially sensitive business information. “

In a follow-up statement, SBA spokesman Jim Billimoria said the report “downplays the historic work the SBA has undertaken to implement the CARES Act and distorts the SBA’s engagement with the GAO “.

“The SBA provides loan-level data to GAO on the more than 4.7 million Paycheck Protection Program loans issued to date,” he said, adding that “the SBA is engages with GAO to ensure that borrowers’ personal and non-public business information is protected. by GAO.

Based on the information available, GAO recommended that the SBA “develop and implement plans to identify and respond to risks in PPPs in order to ensure program integrity, achieve program effectiveness and fight against potential fraud ”.

The SBA said it would apply an additional check on loans over $ 2 million, but that was not enough for investigators.

“As of June 15, 2020, the SBA had not provided us with additional details – including specific review deadlines and procedures – on how it would conduct its review of all loans over $ 2 million.” , the GAO said. In addition, the SBA had not informed us of any specific monitoring plan for the more than 4 million loans under $ 2 million, including how it would identify which loans to review and the number of reviews. planned. “

Additionally, the GAO recommended that the Department of Labor help state unemployment agencies address concerns about workers receiving unemployment benefits while also receiving a salary through Paycheck Protection Program loans.

“The challenges arising from such program integrity issues could result in the loss of millions of dollars which could be difficult to recover,” the watchdog said.

About Deborah Wilson

Check Also

Update on financial situation and process with lenders

Prosafe refers to information about its financial situation and process with lenders that has been …

Leave a Reply

Your email address will not be published.