The federal government awarded more than $5.4 billion in Covid loans to businesses with “questionable” Social Security numbers, according to an alert issued by the government’s Covid watchdog.
may have accounted for as much as $400 billion of the $900 billion disbursed. The Government Accountability Office issued a report earlier this month that estimated unemployment fraud at more than $60 billion, but said that was a low estimate.
According to the alert, PRAC analyzed 33 million loan applications for potentially fraudulent Social Security numbers. PRAC then sent the results to the Social Security Administration for verification. The SSA told PRAC that 221,427 of the Social Security numbers used in the applications “were either not issued by SSA or … did not match the name and/or date of birth information provided … suggesting potential identity fraud.
Despite the problems with the numbers, just under a third, 69,323, were used successfully to secure EIDL or PPP loans totaling $5.4 billion. The alert noted that when the Small Business Administration launched PPP in April 2020, there were “limited controls in place to ensure program integrity.” “Although SBA subsequently added certain fraud prevention controls in 2021, the initial implementation of PPP prioritized the speed of disbursing funds rather than scrutiny of applicant eligibility, a trade-off that contributed to widespread fraud.”
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