A new report from the House of Representatives says that the Biden administration failed to get back about $200 billion in COVID-19 pandemic loans that were not legitimate.
The Small Business Committee of the House, led by Roger Williams (R-Texas), has been looking into how the Small Business Administration (SBA) has handled the emergency financial aid programs that sprung up when state governments shut down businesses across the country during the pandemic for years.
A new report from the committee said, “When Congress made the COVID Lending Programs, they knew that the relief funds had to be sent out quickly to help businesses deal with the economic strain of the pandemic.”
“The rush to get pandemic relief funding out quickly resulted in shortcuts being taken to deliver aid quickly to small businesses in hopes of recouping improper disbursements on the back end.”
There were also claims in the report that the SBA made “numerous decisions that decreased the likelihood” that the government would be able to get back any money that was given under false instructions.
“In total, it is likely that $200 billion from the COVID Lending Programs were disbursed to fraudulent recipients,” it said.
Congress gave about $5.5 trillion to help during the pandemic, and about $1.2 trillion went to the SBA.
The CARES Act, which was signed by former President Trump, and the American Rescue Plan, which was signed by President Biden, gave most of it out.
The report suggested changes to be made to the whole COVID loan system, but it said Democrats were focusing too much on the Paycheck Protection Program (PPP), which had about $64 billion in fraudulent loans, and not enough on the Economic Injury Disaster Loan (EIDL), which had $136 billion in fraud.
The report, which was written by staff for the committee’s Republican majority, said that the Trump administration’s extra work in 2020 put a lot of stress on the relatively small federal agency infrastructure.
“In the days after Congress passed the initial COVID relief legislation, SBA employees worked night and day to craft the rules and policies for its new lending programs,” the report stated.
The report said that the SBA had already given out more money in the first 14 days of these programs than it had in the whole 14 years before.
The SBA team “did a remarkable job” creating them, “but under the circumstances, these SBA employees did not have adequate support, staff, or time to design these programs to be fraud resistant.”
The report said that the Biden administration did not do enough to stop fraud and did not get back the money that was lost after they took over the White House in January 2021.
The report also criticized the last Congress, which was mostly made up of Democrats, for focusing on PPP when the “fraud rate” for EIDL “was approximately four times higher.”
It said that Democrats were focusing on PPP because it involved partners from the private sector.
“It is likely that this misplaced focus by Congressional Democrats, and their surrogates in the media, obscured the realities of fraud in these programs, at least to some degree,” the study said. “While there should be investigations to ensure private companies are following the rules.
Members of Congress and their staff should be careful to direct their efforts toward oversight that is beneficial to the American people, and not just part of a broader messaging push against an emerging industry.”
Republicans said that PPP needed “substantial changes” to work better and be less likely to be hacked.
