The issues in the Covid-19 Economic Injury Disaster Loan program, overseen by the US Small Business Administration, include a finding by congressional researchers that about 1.6 million applications for the loans may have been approved without being evaluated.
Separately, the Office of the Inspector General of the SBA estimated that at least $80 billion distributed through the $400 billion program may have been fraudulent, largely in stolen identities scams.
The program is expected to be at the center of a congressional subcommittee hearing that will also address broader fraud issues with the flood of pandemic aid from multiple federal government programs for states, local governments, businesses and the unemployed.
The $5 trillion total aid delivered in a series of bills signed by Presidents Donald Trump and Joe Biden has created numerous complications.
Fraud overwhelmed enhanced unemployment insurance programs funded by the federal government and administered by the states. There was so much aid to governments that many struggled to find a way to spend it all under the original regulations. And there have been questions about whether the Paycheck Protection Program to keep employees employed was worth it.
The House Select Subcommittee on the Coronavirus Crisis says more than $10 billion allocated under two massive corporate loan programs has been returned due to investigations and banking actions. Federal prosecutors have indicted nearly 1,500 people for crimes related to fraud against the government over business loans and enhanced unemployment insurance programs.
The government’s Pandemic Response Accountability Committee says inspectors general from several federal agencies have at least 1,150 ongoing investigations into fraud involving the various aid funds. Officials say it could take years to fix all the problems.
One of the focus points for the subcommittee is a report released Tuesday by its own staff that found up to 1.6 million loan applications designed to keep small businesses open and had payroll approved through a batch method. . That could mean they weren’t even opened by officials until they were given the green light for funding.
The report blames the SBA for creating the batch approval function early in the pandemic, during the Trump administration.