As the U.S. government this month begins allowing small businesses to not repay their loans from a $525 billion pandemic relief plan, shifting the cost to American taxpayers, the process and the agency overseeing it have come under blunt criticism by the Congressional watchdog...
NEW YORK - As the U.S. government this month begins allowing small businesses to not repay their loans from a $525 billion pandemic relief plan, shifting the cost to American taxpayers, the process and the agency overseeing it have come under blunt criticism by the Congressional watchdog agency.
Last month, the Department of Justice said that it had charged 57 defendants for attempting to steal more than $175 million from the Paycheck Protection Program . The SBA, which oversees the Paycheck Protection Program and has defended its performance while stressing the challenges of overseeing hundreds of billions of dollars in loans in a short space of time, said it is working with the GAO.
Introduced in April to help companies weather the economic shutdown brought on by COVID-19, the PPP in four months was responsible for 5.21 million loans ranging from less than $50,000 each to more than $5 million. The rules stipulated that businesses with limited financing options could seek a loan that would later be fully forgiven.
Velazquez, who chairs the committee, said she had called the SBA to expedite the agency’s response. “Probably the obstruction coming out of the SBA is because they knew they did not take or implement the kind of controls to prevent fraud and abuse,” Velazquez said at the hearing. Also unclear is the extent to which the SBA intends to review the banks’ decisions, the report said, noting it is a conflict of interest for banks to be heavily involved in loan forgiveness since it is in their interest for loans to be forgiven.
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