Small Business Administration overpaid $4.5B in COVID loan advance grants

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A COVID emergency relief program unfairly paid out $4.5 billion to self-employed people – a reflection of the Small Business Administration’s (SBA) inability to detect fraud, SBA Inspector General Hannibal Ware In a report released on Thursday it is written.

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why it matters: The SBA has already faced criticism for issues with fraud in its Paycheck Protection Program.

description: The findings suggest that the SBA, which has been at the forefront of the government’s pandemic response, failed to take steps to identify applications containing “wrong or illogical information,” Ware said.

  • Its $20 billion Economic Injury Disaster Loan Advance program gave small businesses up to $10,000 in immediate grants in the months following the outbreak.
  • Sole proprietors and independent contractors who employed only themselves were only required to collect a maximum grant of $1,000, but managed to obtain a larger grant by claiming over 700,000 additional workers.
  • It turns out that the SBA did not require employees claiming to be sole proprietors to enter their Employer Identification Number. He used his Social Security numbers instead.
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Noteworthy: Some claims were clearly impossible. Hundreds of applicants claimed to have employed more than 500 workers, but this would usually make them ineligible to apply for the program.

  • Fifteen applications claimed that they had one lakh employees.
  • But the SBA “never requested additional information from these sole proprietors to verify the number of employees cited on their grant applications prior to approving and distributing the grants,” Ware wrote.

what to watch: Ware said the government should try to pay off more than $4.5 billion by requesting reimbursement from applicants unable to substantiate their claims to employees.

  • He said cases of suspected fraud should be referred to the Criminal Investigation Department of the Inspector General.
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go in: Scammers have stolen more than $130 million in coronavirus-related schemes

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