New Committee Report Reveals Endemic PPP Fraud

A new report released this afternoon by the House Subcommittee on the Coronavirus Crisis presents a comprehensive analysis of the myriad flaws and failings of Trump’s Paycheck Protection Program (PPP).

The program, which aimed to provide payroll support to struggling small businesses during the COVID-19 crisis, was quickly overwhelmed by fraud and abuse due to its poor design and implementation. With little transparency to speak of, the PPP has allowed wealthy, well-connected businesses to cash out — sometimes doubling and even tripling in its funds after accessing other CARES Act relief — while hundreds actual mom-and-pop businesses have been canned to access help altogether.

The report follows a new New York Times piece laying out a grim way forward for many small businesses now that federal aid has largely run out and the crisis continues to rage.

“It’s no surprise that with each passing week comes more evidence of waste, fraud and abuse in the Paycheck Protection Program,” said Kyle Herrig, president of Accountable.US. “The Trump administration has failed to design and implement a program that would help small businesses and their employees. Instead, they cut corners and kept the American people in the dark. In the end, the wealthy and well-connected were inundated with our tax dollars and fraudsters took advantage of the troubling lack of transparency.

KEY POINTS OF THE REPORT:

  • The Small Business Administration and the US Treasury Department have approved hundreds of PPP loan applications that contain “incomplete or missing identifying information”, including “missing names and addresses”. “The SBA and Treasury approved hundreds of loan applications missing key borrower identifying information. These PPP loan applications were approved despite incomplete or missing identifying information on the loan applications, including missing names and addresses. [Select Subcommittee on the Coronavirus Crisis Memorandum, 09/01/20]
  • Although a business is required to be in operation on February 15, 2020 to be eligible for a PPP loan, the Small Business Administration and the US Treasury Department have approved at least 121 loans to businesses started after that date. “To be eligible for a PPP loan, entities had to be in operation on February 15, 2020. The staff of the selected subcommittee identified 121 PPP borrowers who received PPP loans even if the company started operations after February 15. 2020, according to their SAM record. These results suggest that the SBA and Treasury may not have used publicly available SAM data to validate PPP loan application information. [Select Subcommittee on the Coronavirus Crisis Memorandum, 09/01/20]
  • Nearly 11,000 PPP loans totaling more than $1 billion have been issued to borrowers receiving multiple loans despite SBA guidelines that “individual business entities may not apply for more than one loan” under the PPP. » “Per SBA program guidelines, “individual business entities cannot apply for more than one loan” under the PPP. However, the select subcommittee raised concerns about a vulnerability in the SBA’s loan processing system that has caused many businesses to receive duplicate PPP loans. Staff analysis of loan-level data exacerbated these concerns. This analysis identified 10,856 loans where the same borrower received multiple loans, totaling more than $1 billion in outstanding loans. [Select Subcommittee on the Coronavirus Crisis Memorandum, 09/01/20]
  • Government contractors who had been “previously flagged by the federal government for performance or integrity issues” received 353 PPP loans worth approximately $195 million. “Staff found that the SBA approved 353 PPP loans, totaling approximately $195 million, to government contractors previously flagged by the federal government for performance or integrity issues.” [Select Subcommittee on the Coronavirus Crisis Memorandum, 09/01/20]

Accountable.US has tracked the Trump administration’s mishandling of financial aid to the wealthy and well-connected rather than to those most in need. Learn more about COVIDBailoutTracker.com.

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