Thousands of small-business loans may have been fraudulent, House panel finds
WASHINGTON (Reuters) - Tens of thousands of loans worth billions of dollars may have been subject to fraud, waste and abuse in the $659 billion taxpayer-funded Paycheck Protection Program (PPP) aimed at helping small U.S. businesses survive the coronavirus pandemic, a congressional panel said on Tuesday.
Over $1 billion went to companies that received multiple loans, in violation of the program’s rules, the House of Representatives Select Subcommittee on the Coronavirus Crisis said.
U.S. Treasury Secretary Steven Mnuchin is due to testify before the panel at 1:00 pm (1700 GMT) on Tuesday.
Democrats in Congress and the Trump administration have been at loggerheads since July over further steps to bolster the economy after Congress approved trillions of dollars in March to respond to the coronavirus pandemic.
The PPP provided more than 5.2 million forgivable loans through the U.S. Small Business Administration (SBA) by the time it ended on Aug. 8.
The Treasury Department and the SBA did not immediately respond to requests for comment.
The Trump administration says the PPP has saved some 51 million jobs at a time when much of the U.S. economy has been shuttered due to the coronavirus.
Economists say the actual impact is far lower, likely between 1 million and 14 million jobs.
The Democratic-led panel found more than 600 loans went to companies that should have been ineligible because they had been barred from doing business with the government. Another 350 loans went to contractors with previous performance problems.
Nearly $3 billion went to businesses that had been flagged as potentially problematic by the government.
Staff found evidence that as few as 12 percent of Black and Hispanic business owners received the full funding they requested.
The SBA’s internal watchdog has also found “strong indicators” of potential PPP fraud.