SBA OIG and GAO Officials Testify on Oversight of PPP and EIDL Programs

WASHINGTON, D.C. – Today, the House Committee on Small Business Subcommittee on Investigations, Oversight, and Regulations heard from officials from the Small Business Administration (SBA) Office of the Inspector General (OIG) and the United States Government Accountability Office (GAO) on oversight reports from the SBA OIG and GAO covering the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) Program.

“To combat the economic impact of the Coronavirus pandemic, this Committee has worked to create and optimize economic relief programs administered by the SBA. Both [PPP and EIDL] programs have been a lifeline for our nation’s small businesses,” said Ranking Member Ross Spano (R-FL).  “With only the basic statistics, Congress cannot fully measure the impact of these programs.  We need to ensure that loans went to the intended businesses and that the loan proceeds were used properly. We look forward to working together to make sure taxpayer dollars are spent appropriately, and to reduce waste, fraud, and abuse in these critical SBA relief programs.”

Officials Detail Potential Risks to Program Integrity

“SBA’s tremendous role in the nation’s pandemic response is without precedent. It is noteworthy that SBA executed over 14 years’ worth of lending within 14 days, and this was just the beginning. The speed and reduced controls surrounding this lending authority brought with it substantially increased risk,” said Mr. Hannibal “Mike” Ware, Inspector General, United States Small Business Administration, in Washington, DC.  “The oversight challenges of SBA’s pandemic response efforts are continuing to evolve with the hundreds of fraud cases, tens of thousands of allegations of wrongdoing being received by OIG’s Hotline, and concerns surrounding internal controls mounting based on our review findings. We will continue our efforts to keep the Administrator and this Congress currently and fully informed of our findings. Nothing short of the public trust is at stake, as well as the vitality of the nation’s economy.”

Mr. Ware continued, “Fraudsters are going to do what fraudsters are going to do.  We have to continue to meet with the agency when we find new schemes so that they can pivot quickly to mitigate a lot of the risks and shore up their controls and I think they have been pretty responsive to that.”

“Given the immediate need for these loans, SBA worked to streamline the program so that lenders could begin distributing these funds as soon as possible.  For example, lenders were permitted to rely on borrowers’ self-certifications for eligibility in use of loan proceeds.  As a result, there was significant risk that some fraudulent or inflated applications were approved,” said Mr. William Shear, Director, Financial Markets and Community Investment, United States Government Accountability Office, in Washington, DC. “Because SBA had limited time to implement safeguards up front for loan approval, we believe that planning and oversight by SBA to address risk in the PPP program is crucial going forward.”

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