Nearly $84 billion in coronavirus crisis lending under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program may be fraudulent, the U.S. House Select Subcommittee on the Coronavirus Crisis said, adding that the Justice Department has recovered only $626 million, or less 1% of disbursements.
The Inspector General at the Small Business Administration (SBA) has received 148,525 complaints on its hotline related to the PPP and EIDL, compared with the usual annual total of 800, according to a March 25 memo by the subcommittee’s Democratic staff.
“These programs have played a crucial role in helping small businesses keep their lights on and keep workers on the payroll during the pandemic,” the memo said, adding “the Trump administration refused to implement basic controls” despite warnings from the subcommittee.
The Senate on Thursday passed bipartisan legislation extending the PPP by two months until May 31 and giving the SBA 30 days beyond that date to process PPP loan applications. The legislation, approved earlier this month by the House, now goes to President Biden for his signature.
“The PPP has been an enormous success, sustaining millions of small businesses and tens of millions of jobs,” Sen. Susan Collins (R-Maine) said after the vote. “I am pleased that Congress came together once again today to help more small businesses to access this lifeline.”
Small businesses badly need the extra application time, according to the National Federation of Independent Business (NFIB). Thirteen percent of small business owners said they will need to shut down unless the economy improves within six months, according to an NFIB survey released on Thursday.
“The overall recovery remains uneven across small business industries,” according to Holly Wade, Executive Director of NFIB’s Research Center. “It is crucial that small businesses are given the resources and flexibility needed to ensure they will have a successful recovery.”
The SBA as of March 21 issued more than 8.2 million forgivable PPP loans totaling more than $718 billion, aiming to cushion small businesses and their employees against losses stemming from the coronavirus. More than $50 billion remains available.
Under the EIDL, the SBA has also provided more than 3.7 million loans totalling more than $200 billion. Small businesses and non-profit organizations can apply for EIDL relief from a temporary loss of revenue.
PPP lending last year softened the blow from COVID-19, helping 5.2 million small businesses maintain employment for 51 million U.S. workers, according to the SBA.
Small businesses account for 44% of gross domestic product and employ nearly half of U.S. workers, the White House said.
The $1.9 trillion American Rescue Plan signed by President Biden this month earmarks an additional $142 million for federal watchdogs to identify fraud in coronavirus aid programs.