A small business management program aimed at keeping entrepreneurs standing during the coronavirus pandemic may have sent billions of dollars to scammers and ineligible applicants, according to a new censorship report.
In a report released Wednesday, SBA Inspector General Hannibal “Mike” Ward said that more than $ 78 billion in approved aid to companies under the agency’s economic disaster loans program may have gone toward fraudulent or ineligible actions.
The companies repaid $ 30 billion in PPP virus relief loans
The report found $ 58 billion was paid out in multiple loans to companies that used the same IP addresses, email addresses, bank accounts, or the same physical addresses. About $ 13.4 billion went into accounts different from those included in the original loan applications, and nearly $ 1.1 billion went to potentially ineligible companies.
The fraud arose out of the agency’s rush to provide assistance to companies hit by the epidemic; To speed up the process, the Small Business Administration (SBA) lowered barriers, writes Ward, “which has significantly increased the software’s fraud risk.”
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Within days, the agency received an unprecedented number of loan requests: on March 31, it received 680,000 applications, the highest number received in a single day. By April 10, the agency had over 4.5 million requests to count. In order to speed up the process, SBA employees were given an average of 15 minutes per request to make their decision.
Under the program, companies can take out revocable loans of up to $ 10,000. The agency distributed about $ 211 billion in loans over the course of the virus crisis.
But SBA Director Giovita Carranza rejected the report, saying in a letter that it “grossly exaggerates the risks of fraud, waste and abuse” and indicated that it “does not fully and accurately depict SBA’s highly successful delivery of an unprecedented volume of disaster assistance”.
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