A new study showed that banks possibly doled out hundreds of billions of dollars of Paycheck Protection Program (PPP) loans to fake businesses across the country.

PPP Loan
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The PPP is one of the programs under the CARES Act that aims to help businesses in the country who have been severely impacted by the COVID-19 pandemic.

Its main goal is to help businesses retain their employees in the payroll and, at the same time, to offer forgivable loans to improve the business.

But since the PPP was offered, many fake companies and individuals took advantage of the program. It is either the businesses do not exist, or an individual pretends to own a business. This alleged scam has become very rampant over the past few months.

According to the study, thousands of business loan fraud have been reported in July. The study said these instances have significantly increased over the summer, with the total amount reaching hundreds of billions of dollars.

The Project on Government Oversight, which analyzed previously unreported government data, has seen an "abnormally high" number of suspected business loan fraud in July. These incidents have been reported and filed at the Treasury Department's Financial Crimes Enforcement Network.

It was found that the number of reports filed concerning business loan fraud is seven times higher compared to the data in June. Around 1,044 incidents were filed in July, while 489 cases were filed in June.

According to a published report in Fox News, the reports are indications that there could be suspicious activities involved and not a definite declaration of fraud alone.

The researchers said it was still unclear if all of these instances were related to loans administered through the PPP. However, they noted that the spike in suspicious activity reports coincided with the timeframe under which banks were administering the funds.

The PPP loan application started in April and ended in August. During these months, there have been fake businesses and individuals reported of illegally claiming PPP loans.

In fact, the Department of Justice recently announced the filing of charges against more than 50 people accused of stealing more than $175 million from the program. Two of them were from Florida, who pretended as owners of ranches and has small farms.

As of August, the Small Business Administration (SBA) said more than 5.2 million loans were approved under the relief program. The total amount of loans illegally obtained has reached $525 billion, and the average loan size was $100,729.

The SBA also said it had issued hundreds of billions of dollars of relief loans through its Economic Injury Disaster Loan program.

The PPP is supposed to be for small businesses affected by the COVID-19 crisis. As of this time, lawmakers have proposed legislation that will give another opportunity for small businesses to apply for a second loan.

However, both the Republicans and the Democrats have yet to reach an agreement for the second stimulus package that includes PPP loans.

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