U.S. government releases more data on millions of businesses that took
pandemic aid
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[December 02, 2020]
By Michelle Price and Koh Gui Qing
WASHINGTON (Reuters) - The Trump
administration late on Tuesday released the names of more than 10
million businesses and individuals that took pandemic aid, providing
more transparency for the programs which officials say have been plagued
by fraud and abuse.
The Treasury Department and Small Business Administration (SBA) were
forced to release the information on the Economic Injury Disaster Loan (EIDL)
and Paycheck Protection Program (PPP) after a federal judge last month
sided with a challenge brought by news organizations seeking the data
under the Freedom of Information Act.
The two programs were the primary means by which the federal government
assisted small businesses hurt by the COVID-19 pandemic, but the Trump
administration from the outset had resisted providing full transparency
on who got the cash.
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“SBA's historically successful COVID relief loan programs have helped
millions of small businesses and tens of millions of American workers
when they needed it most," a spokesperson for the SBA said.
As of November, the SBA had processed and approved more than 5.2 million
individual PPP loans amounting to $525 billion, along with 3.65 million
EIDL loans worth $194 billion. Several billions of dollars have gone to
ineligible businesses and fraudsters, watchdogs have warned.
The SBA in July identified borrowers who took more than $150,000 from
the PPP, but provided only aggregated and anonymized data for borrowers
who took less than $150,000, which accounted for roughly 85% of the
total number of PPP loans. The agency provided similar partial
disclosures for EIDL loans.
The Trump administration said that identifying the EIDL and PPP
recipients would violate individuals' personal privacy and reveal
confidential business information that can be redacted under Freedom of
Information Act exemptions.
A federal judge in Washington, D.C., rejected that argument and
dismissed further efforts by the agency to delay releasing the data,
which it mandated must be published by Dec. 1.
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The United States Department of the Treasury is seen in Washington,
D.C., U.S., August 30, 2020. REUTERS/Andrew Kelly
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FRAUD AND ABUSE
Between April and August, thousands of lenders issued
government-backed PPP loans capped at $10 million to small
businesses hurt by pandemic lockdowns. Provided that borrowers can
show they needed the money and spent it mostly on payroll and other
business expenses, the government pays the lender back.
The SBA also directly dished out $20 billion in EIDL grants of up to
$10,000, and a further $194 billion in EIDL loans that the SBA
capped early on in the program at $150,000.
Tuesday's data will provide more transparency over whether pandemic
aid went to businesses most in need and may shape changes to the
programs if Congress passes another stimulus package in coming
weeks.
In a bid to get funds out the door to struggling businesses quickly,
the SBA waived some of its normal lending safeguards, and in the
case of the PPP, said it would not hold lenders responsible if
borrowers broke the program rules. That, however, made both programs
highly susceptible to fraud, watchdogs said.
The Office of Inspector General for the SBA said in an October
report, for example, that around 46% of the $169.3 billion worth of
EIDL loans approved by July 31 were questionable and might be
susceptible to fraud, according to a Reuters analysis of the
agency's findings. The SBA has disputed that there was sufficient
evidence to draw that conclusion.
Meanwhile, congressional investigators have said at least $1 billion
in PPP went to ineligible businesses. To date, the Justice
Department, working with other agencies, has charged over 80
individuals for stealing more than $250 million from the program.
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(Reporting by Michelle Price; Editing by Leslie Adler)
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