On January 14, 2021, the Inspector General (“IG”) of the U.S. Small Business Administration (“SBA”) released a new report on the IG’s inspection of the SBA’s implementation of the Paycheck Protection Program (“PPP”), a lending program established pursuant to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and designed to provide fully guaranteed SBA loans for certain eligible small businesses.

Among other findings, the report highlighted the problem of ineligible businesses receiving PPP funds through the use of fraud.  In particular, the report analyzed PPP loan data and found nearly 55,000 loans for approximately $7 billion went to potentially ineligible businesses.  According to the report, the most common businesses to improperly receive funds were those that: (1) obtained a Taxpayer Identification Number after February 15, 2020, the date before which a business must have been in operation to qualify for PPP funds; (2) exceeded maximum loan amounts based on the number of its employees; and (3) exceeded other maximum size standards.

The report also found that SBA’s PPP loan-level data was inaccurate and incomplete, and SBA guidance was not sufficient to ensure PPP lenders prioritized underserved markets during the initial round of funding. The report made numerous recommendations to SBA to improve the implementation of PPP lending, including that SBA strengthen or implement necessary internal controls to address potential fraud in future rounds of PPP lending. 

Read the report here.

In October, the SBA IG issued a report on the Economic Disaster Loan Program (“EIDL”), an SBA-administered disaster assistance program that provides loans up to $2 million to eligible entities.  Click here to read Neil V. Getnick’s Op-Ed in Government Executive about that report, and click here to read Mr. Getnick’s Law360 Expert Analysis column demonstrating the critical role that whistleblowers are playing to ensure the proper use of COVID-19 disaster relief funds.