PPP Loans Awarded Improperly to Thousands of Small Businesses, Report Says
Tens of thousands of small-business loans under the Paycheck Protection Program (PPP) may have been subjected to fraud, waste, and abuse, a report said.
According to a House oversight committee report released on Tuesday, small-business loans were improperly awarded to firms that already had received a PPP loan or were barred from doing business with the federal government.
The $659 billion taxpayer-funded PPP has been allocated for helping small U.S. businesses survive during the coronavirus pandemic.
Select Subcommittee on the Coronavirus Crisis report showed that the Trump administration's some 10,000 loans worth $1 billion had been given to firms that have been excluded from doing business with the government because these businesses were either debarred or suspended from receiving federal contracts.
More than 350 loans worth $195 million were awarded to businesses with significant performance and integrity issues.
In addition, over 11,000 loans worth about $3 billion were granted to companies that did not include complete information from applicants.
Committee Chairman James Clyburn, D-S.C., said the Treasury must improve oversight and accountability to ensure that taxpayers' money is "not squandered."
"Taxpayers should not have to choose between quickly getting aid to those who need it and wasting federal funds, and there are simple steps that could have been taken to improve oversight and reduce fraud," Clyburn said in a report.
The PPP fund has about $140 billion left from the $660 billion Congress provided. The program, which expired on August 8, helped more than five million small businesses during the coronavirus pandemic.
Upon expiration, there was no clear consensus about its future. Discussions about amending the PPP program have been postponed amid a larger stalemate between congressional leaders and the White House over the next round of coronavirus stimulus package.
Senators are in talks to change the program so that small businesses could apply for a second loan.
Under the PPP program, businesses with 500 workers or less are qualified for loans up to $10 million. Borrowers can qualify for partial loan forgiveness if less than 60 percent of the amount is spent on payroll.
"When you approve $3 trillion and expect the federal government to get it out the door and to people in a matter of days, of course, there may be a few mistakes," Rep. Jim Jordan, R-Ohio, said in a report.
"What should be commended though is the hard work done to correct those mistakes. These programs save and continue to save jobs," Jordan added.
The Trump administration said the PPP had saved around 51 million jobs, at the time when much of the U.S. economy has been affected by the coronavirus pandemic.
Meanwhile, stimulus checks are still under discussion. Reports said that if negotiators reach an agreement in the coming weeks, the Internal Revenue Service (IRS) could still send a second stimulus check to eligible Americans by the end of the year.
Clyburn stressed that additional economic stimulus is urgently needed as the pandemic drags on states, cities, and businesses warn that more layoffs may happen.