House lawmakers scrutinize Small Business Administration over COVID loan fraud in hearing
WASHINGTON (TND) — COVID-19 loan fraud is in the spotlight again and lawmakers on Capitol Hill say more needs to be done at the Small Business Administration to prevent taxpayer money from ending up in the wrong hands.
Monday will mark three years since the Paycheck Protection Program started giving out loans to small businesses in need during the COVID-19 pandemic. A lot has changed since then and a lot of fraud has been uncovered too.
Chairman of the House Committee on Small Business Rep. Roger Williams, R-Texas, led a hearing titled “Oversight of the Small Business Administration" last week with the goal of increasing oversight and transparency when it comes to the Small Business Administration.
"The agency’s handling of COVID-19 pandemic loan programs and failure to adhere to the advice given by the Office of Inspector General to prevent the rampant fraud that occurred exposed the agency’s shortcomings and inability to be a competent steward of taxpayer money. Our country’s small businesses and taxpayers deserve better, and the Committee is determined to get the Small Business Administration back on track," Williams said in a statement after the hearing.
It seems there’s a new headline about a COVID-19 loan fraud case daily and the SBA is continuing to catch heat as new cases continue to arise.
“A disorganized management structure and a lack of basic guardrails to prevent fraud led to unacceptable amounts of waste of taxpayer dollars,” said Williams. “Criminal opportunists took advantage when the SBA was overwhelmed with the sheer volume of work they were asking to do."
The Pandemic Response Accountability Committee identified $5.4 billion in suspicious small business loans. About $1.2 trillion was allocated for the Small Business Administration's COVID-19 Economic Injury Disaster Loan program and the Paycheck Protection Program.
White House Press Secretary Karine Jean-Pierre defended the decision, saying, “10.5 million applications that we have seen for small businesses — that's because of the work that we have done.
The White House also backed the Small Business Administration this week.
“We have seen this increase of people going out there trying to start small businesses. We have seen making sure people don’t get left behind, and this is because of SBA programs and services,” said Jean-Pierre.
The White House says the SBA has improved technology, processes, and customer service. The agency has also established a Fraud Risk Management Board and Special Counsel for Enterprise Risk and while the Bipartisan Policy Center — a think tank that promotes bipartisanship — gives credit to the SBA for taking on such a huge task during the COVID-19 pandemic, they have a new report calling for the agency’s modernization.
“It's no secret that a lot of the technological systems that SBA — while they have been updated and they and they tried to move to a rapid, you know, response rapid processing system during COVID — need a lot of updating,” said Dane Stangler, director of strategic initiatives at the Bipartisan Policy Center.
“We made several recommendations in the report about streamlining, about reducing some of those burdens, both on small businesses but also some of the lenders who participate in those programs,” Stangler continued. “One of the top line messages of the report is that Congress has an opportunity to reauthorize SBA.”
Earlier this month, President Joe Biden laid out his $1.6 billion pandemic anti-fraud proposal. It would allocate funds to the SBA to investigate organized pandemic fraud but Republican lawmakers say they disagree with the administration and have concerns about increasing the SBA’s role as a regulator.
The Internal Revenue Service is also investigating COVID-related fraud cases. Their newest numbers show that 458 people have been indicted for their alleged COVID-related crimes and the agency says they have investigated 975 tax and money laundering cases totaling $3.2 billion.
The Small Business Association issued a response to this story Wednesday, saying:
"The Biden-Harris SBA has worked since day one to address lapses that occurred during the previous administration, diligently working to rebuild anti-fraud measures, restore integrity to essential programs, and collaborate closely with our partners across the federal government to mitigate and ensure criminals are held accountable. We look forward to continue working with the Chairman and the Committee to further strengthen SBA's anti-fraud measures, grow our programs, and build an agency that truly serves all Americans."
