Ernst: Biden’s SBA Must Recover Fraud, Not Loosen Lending Standards
SBA likely disbursed more than $200 billion in potentially fraudulent COVID-19 funds
WASHINGTON – Today, the Small Business Administration (SBA) Office of Inspector General released the first comprehensive fraud estimate for SBA’s COVID programs. The report revealed SBA likely disbursed more than $200 billion in potentially fraudulent COVID-19 Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) funds. More than $136 billion in COVID-19 EIDLs, 33% of the total, and $64 billion in PPP loans, 8% of the total, were potentially fraudulent.
U.S. Senator Joni Ernst (R-Iowa), Ranking Member of the Senate Small Business Committee, released the following statement:
“I’m disgusted $200 billion of our taxpayer dollars, set aside to support small businesses, were funneled to thieves, organized criminals, and transnational gangs under the Small Business Administration’s watch,” said Ranking Member Ernst. “While I’ve repeatedly urged SBA to focus on accountability and recoveries, it has doubled down on its inaction and is now refusing to pursue debt collections as required by statute, forgiving as many loans as possible, and rewriting the rules of its core lending programs to make them less secure. The IG’s report is further proof the SBA must wake up and focus on fixing its mistakes rather than making new ones.”
BACKGROUND:
Ernst has long fought to bring accountability to the SBA and safeguard taxpayer dollars.
In 2021, Ernst highlighted reports regarding potential fraud and identity theft within the EIDL program and asked Administrator Guzman about the SBA’s efforts to combat this fraud.
In 2022, Ernst pressed the SBA on the number of fraudulent loans awarded, efforts to recover these funds, and how she can work with the agency to ensure this does not happen again in the future.
In March, Ernst joined Committee Chairman Ben Cardin (D-Md.) in requesting that the SBA work with congressional committees and go back to the drawing board on the agency’s irresponsible changes to its loan underwriting while permitting an unlimited number of non-bank financial technology companies, or “fintechs” – the very entities responsible for issuing billions of dollars-worth of Paycheck Protection Program (PPP) fraud – to participate as lenders. Ernst also questioned SBA Administrator Isabella Guzman, demanding that the SBA review all Paycheck Protection Program (PPP) loans suspected of fraud, pursue administrative recoveries, and reverse course on misguided proposed rules.
In April, Ernst demanded that SBA continue collections on nearly $72 billion of taxpayer-funded COVID loans.
In May, Ernst joined Committee Chairs Ben Cardin, Roger Williams, and Ranking Member Nydia Velazquez, in asking SBA to delay the implementation of lending rules until permanent leadership can be established at the SBA Office of Capital Access. The bipartisan, bicameral letter has gone unanswered by the Administration.
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