Democrats Alle Billions in ‘Fraud, Waste and Abuse’ P3s
Democrats on a House subcommittee overseeing the response to the coronavirus crisis released a report saying it is possible that billions of dollars from the Paycheck Protection Program (PPP) have been diverted to “fraud, waste and abuse ”.
“Analysis shows that PPP has helped millions of small businesses and nonprofits stay afloat during the coronavirus crisis, but a lack of oversight and accountability from the Treasury Department and the Small Business Administration (SBA) may have led to billions of dollars being diverted into fraud, waste and abuse, rather than reaching the small businesses that really need it, ”the report says.
Democrats on the select subcommittee on the coronavirus crisis cited a number of examples of potential problems with the program, which is administered by the SBA and the Treasury. They include claims that:
- Over $ 1 billion in loans went to companies that received multiple loans.
- Over 600 loans totaling over $ 96 million have been made to companies excluded from doing business with the government.
- Over 350 loans worth $ 195 million have been made to government contractors with significant performance and integrity issues.
- Subcommittee staff compared the federal government’s Rewards Management System (SAM) database to information used by companies to obtain PPP loans to identify red flags, such as mismatched addresses. . These flags involved more than 11,000 borrowers and $ 2.98 billion in PPP loans.
- PPP loan applications were approved despite incomplete or missing credentials on loan applications including missing names and addresses.
Now Democrats want the PPP to have more oversight. They call on the Treasury and the SBA to tighten controls over loan cancellation, implement a stronger audit plan, and cooperate more with oversight bodies like Congress and Inspectors General.
“Taxpayers shouldn’t have to choose between getting help quickly to those in need and wasting federal funds, and simple steps could have been taken to improve oversight and reduce fraud,” the representative said. James Clyburn, Democrat of South Carolina. , in his opening remarks at a subcommittee hearing on September 1.
In a separate report, Republicans on the subcommittee countered that fraud was minimized; the SBA has reportedly distributed 5.2 million PPP loans totaling $ 525 billion to date. What’s more, Republicans say the PPP has saved 51 million jobs.
“The SBA and our nation’s banks have worked tirelessly to provide over $ 342 billion in loans in 14 days,” the Republicans said in their report. “Behind the scenes, the SBA and the Treasury worked together to quickly secure funds for more than 84% of small businesses nationwide, with minimal fraud.”
Trump administration officials, including Treasury Secretary Steven Mnuchin, and other Republicans admitted there were problems with the PPP, but explained that was to be expected given the mad rush to deploy the program to save businesses and jobs.
“Small business administration and Treasury Department officials, along with their counterparts in financial institutions, have worked tirelessly to stand up and execute the PPP,” the Republicans wrote in their report. “Technical issues with the SBA’s E-Tran portal, which was receiving an unprecedented volume of loan applications, [were] resolved in a few days. The SBA also provided clarification on some aspects of the program to provide more information to applicants, lenders and Congress. Their efforts may have prevented a doomsday scenario for American small businesses. “
Mnuchin also noted that $ 30 billion had been returned to the program by companies that should not have initially received these loans. While there have been indications that the Trump administration will not audit loans under $ 2 million, Mnuchin said loans below that amount could also be reviewed.
$ 130 billion remains in the P3, a federal government forgivable loan program designed to directly incent small businesses to keep their employees on the payroll during the economic upheaval of the coronavirus pandemic. Authorities stopped accepting new applications for the program on August 8. There is bipartisan support for restarting the program, but disagreement over how to handle another stimulus bill has hampered progress on the PPP.