A Small Business Administration program intended to keep entrepreneurs afloat during the coronavirus pandemic may have sent billions of dollars to scammers and ineligible applicants, according to a new watchdog report.
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In a report released Wednesday, SBA Inspector General Hannibal "Mike" Ward said that more than $78 billion in aid approved for businesses under the agency's Economic Injury Disaster Loan Program may have gone toward potentially fraudulent or ineligible businesses.
The report found $58 billion disbursed in multiple loans to businesses that used the same IP addresses, email addresses, bank accounts or the same physical addresses. About $13.4 billion went to accounts that differed from those listed on the original loan applications, and roughly $1.1 billion went to potentially ineligible businesses.
The fraud stemmed from the agency's rush to deliver aid to pandemic-stricken businesses; to speed up the process, the SBA "lowered the guardrails," Ward wrote, "which significantly increased the risk of program fraud."
Within days, the agency received an unprecedented number of loan applications: On March 31, it received 680,000 applications, the highest number ever received in one day. By April 10, the agency had more than 4.5 million applications to sort through. In order to speed up the process, SBA employees were given an average of 15 minutes per application to make their decision.
Under the program, businesses could receive forgivable loans of up to $10,000. The agency distributed some $211 billion in loans over the course of the virus-induced crisis.
But SBA Administrator Jovita Carranza rejected the report, saying in a letter that it "grossly overstates the risk of fraud, waste and abuse" and indicated it did not "fully and accurately portray SBA's highly successful delivery of an unprecedented volume of disaster assistance."