04/20/2021 | Press release | Distributed by Public on 04/20/2021 18:45
Washington, D.C.- Today, House Small Business Committee Chairwoman Nydia M. Velázquez (D-NY), led a hearing regarding reports of waste, fraud, and abuse in the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. The hearing featured testimony from representatives from the Small Business Administration Office of the Inspector General (SBA OIG) and the Government Accountability Office (GAO) regarding reports their offices had released on the programs and SBA efforts to alleviate these issues.
'I commend the SBA's staff who have worked diligently around the clock, often seven days a week for over a year now. Their dedication and work-while not perfect-have made a difference in the lives of millions of small business owners and workers,' said Chairwoman Velázquez. 'Now is the time to continue this Committee's work to take a hard look at this effort and learn lessons for the future.'
Since the passage of the CARES Act, the SBA has approved 4.2 million PPP loans worth $229 billion, 3.77 million EIDL loans for approximately $195 billion, and has disbursed 5.8 million EIDL advances amounting to $20 billion. During the COVID crisis, SBA administered more loans than it had for all other disasters combined during its 67-year history. The size and scope of the programs- in addition to their quick rollout- left PPP and EIDL open to fraud and abuse. SBA OIG and GAO have issued 16 combined reports on the programs since the pandemic began. During the hearing, the witnesses discussed the issues they discovered during their investigations.
'While millions of small businesses have benefited from these programs, the speed with which the programs were implemented left SBA with limited safeguards to identify and respond to program risks, including susceptibility to improper payments and fraud,' said Bill Shear, Director of Financial Markets and Community Investment at the Government Accountability Office. 'Since June 2020, we have reported on the potential for fraud in both PPP and EIDL and have made eight recommendations to SBA to improve the programs (four for PPP and four for EIDL). In addition, we included these programs as a new area on our High-Risk List in March 2021 because of their potential for fraud, significant program integrity risks, and need for much-improved program management and better oversight.'
Witnesses also testified on the progress that SBA had made in addressing these issues and program improvements that the Biden administration instituted. In 2021, the new administration has taken steps to restore program integrity in PPP and EIDL through increased internal guardrails like loan reviews and compliance checks.
'This administration has been very upfront, very transparent, very interested in implementing the recommendations or at least taking steps to move in that direction, and very interested in hearing what the Office of the Inspector General has to say,' said Mike Ware, Inspector General at the Small Business Administration.
Click here for a complete recording of the hearing.