PPP Loans Approved for Businesses on Treasury 'Do Not Pay List,' IG Report Finds
Those businesses that were not supposed to receive money were approved for $3.6 billion in loans by early August.
As the Trump Administration reopens the Paycheck Protection Program for a new round of loans, the Small Business Administration’s Inspector General warned this week that during the earlier round of PPP lending, more than 57,000 loans were approved for businesses that were on a Treasury Department “Do Not Pay” list.
Those businesses were approved for $3.6 billion in loans by early August, the IG said, although it is unclear how much of that money was distributed by the end of the year.
Echoing concerns first raised by the Government Accountability Office, the IG said that the SBA relied on questions on a loan application that was filled out by borrowers and submitted to financial institutions, including credit unions.
“We believe the identified PPP loans were made to potentially ineligible recipients because (the) SBA and its lenders relied on applicants’ self-certification for PPP loan eligibility,” the IG said.
The IG said, for example, applicants were required to certify that they did not have any current federal debarments or suspensions and the borrowers did not have delinquent federal loans or have defaulted on any federal loans.
The IG said the agency provided an inadequate response to the report, saying that the SBA and Treasury Department have given conflicting reports of how safeguards are being implemented.
“(The) SBA should take immediate action to limit improper payments by strengthening existing controls and implementing additional internal controls to address improper payments, especially through the utilization of existing resources,” the IG said.
The Trump Administration announced this week that following congressional action in December, it is opening a new round of PPP lending for first-time and repeat borrowers.
The SBA on Tuesday released loan forgiveness data for the earlier round of PPP loans.
The SBA reported that the federal government already has forgiven more than 1.1 million PPP loans totaling more than $100 billion. The SBA said it has received almost 1.35 million loan forgiveness applications for about $170.5 billion.
“Today’s news is a key indicator that the PPP is working for all small businesses across our nation,” SBA Administrator Jovita Carranza said.