U.S. pandemic relief program mistakenly paid $ 692 million in duplicate loans – Watchdog
By Pete Schroeder
WASHINGTON, March 15 (Reuters) – The United States Small Business Administration (SBA) mistakenly disbursed $ 692 million in duplicate pandemic relief loans to small businesses due to technical errors and other errors, the agency’s internal watchdog said on Monday.
Lenders participating in the Paycheck Protection Program (PPP) distributed the money to 4,260 borrowers who had already received funds due to multiple technical issues in the SBA’s loan processing systems, which were struggling to process cash loan volumes, the SBA Inspector General wrote in a report. .
Reuters first reported in June that technical snafus led the SBA to approve thousands of duplicate loans potentially worth hundreds of millions of dollars.
Under this program, lenders provide government guaranteed loans to small businesses on behalf of the SBA. If the borrowers use the funds for their intended purpose, such as keeping staff employed, they keep the money and the government pays the lender back.
The watchdog did not say how much the $ 692 million mistakenly distributed by lenders was subsequently repaid by the government. He initially said he would only guarantee one loan per borrower, meaning the lenders, rather than the taxpayer, could be responsible for the mistake.
Reuters reported in June that lenders had attempted to collect duplicate loans from borrowers.
In response to Monday’s report, SBA officials said the agency would flag any suspicious duplicates for further investigation and expected the issue to be resolved by September.
The watchdog added that he had seen no evidence that borrowers were intentionally exploiting SBA systems to secure multiple loans.
Amid the frantic launch of the first-come, first-served program last April, many borrowers asked multiple borrowers to increase their chances of getting a loan.
An SBA computer program intended to detect such duplicate applications has failed, the watchdog said. Additionally, the SBA system did not detect a duplicate request if the borrower’s Social Security number and Employee ID number were reversed on the second request.
At one point, the number of duplicate PPP loans approved exceeded 40,000, but SBA officials were able to spot and resolve most of these before lenders disbursed the money, the inspector general said. of the SBA.
(Reporting by Pete Schroeder; Editing by Michelle Price and Peter Cooney)