Mon. Apr 22nd, 2024

The House Select Subcommittee on the Coronavirus Crisis has found out that several companies have violated the rules of the Paycheck Protection Program loans.

While disclosing this in an analysis released on Tuesday September 2, 2020, the committee revealed that the companies have received double of the loan totaling over $1 billion in emergency fund.

The program was part of the $2 trillion CARES Act, and about $10 million in emergency and forgivable loans is dedicated to help small businesses build up their financial power and take care of their basic expenses.

However, Congressional investigators have found out different potential waste and fraud in the program.

It was suggested that there must have been some diversion of funds from small businesses to ineligible businesses or criminals, according to a subcommittee hearing with Treasury Secretary Steven Mnuchin on Tuesday afternoon.

The subcommittee found 10,000, loans with borrowers obtaining more than one loan. Given the administration rules, only 65 would have needed to be given additional review.

Following the finding, companies already banned from doing business with the federal government received about 600 loans that amount to $100 million, government contractors flagged by the government over their performance or integrity issues, had about 350 loans that totaled $200 million.

Also over 11,000 borrowers flagged in the government’s System for Award Management.
The Small Business Administration, responsible for the program, has urged reporters to review the subcommittee’s Republican staff’s report.

Speaking about the investigation, SBA Administrator, Jim Billimoria wrote in an email that “Investigation is partisan but said there were few cases of frauds.”

Speaking about the program, the subcommittee staff members said “While there were some challenges implementing the program, as would be expected in implementing a program of this size on an expedited timeline, SBA processed applications quickly and avoided fraud to the extent that is typical of disaster relief and other large government programs.”

“SBA should remain vigilant to ensure loan forgiveness only extends to businesses who complied with the letter of the law,” they added.

Director of FactSquared, a Washington, D.C.-based data analytics firm, Mark Walsh, head of the SBA’s Office of Investment and Innovation during the Obama administration, said there would always be bad actors in the program.

He therefore recommended that applications processes should be handled by external members, there should be time sensitive sectors citing restaurant as an example, and penalty should be increased for violations.

President of a government waste watchdog known as Accountable.US, Kyle Herrig, said the current administration failed to implement a program that would actually help small businesses and their workers.

Similarly, experts have also criticized the program saying that the errors in the program is a call to allow for much openness and rigorous oversight.

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