Internal U.S. small business watchdog launches inquiry
into duplicate pandemic loans
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[July 15, 2020] By
Chris Prentice
WASHINGTON (Reuters) - The U.S. Small
Business Administration's internal watchdog has launched an inquiry into
a technical glitch that led many small businesses to receive duplicate
loans through a high-profile federal coronavirus aid program.
A spokesman for the SBA Office of the Inspector General confirmed that
the office has begun a review of the issue, which Reuters reported last
month may have led to hundreds of millions of dollars in duplicate loans
being approved under the $660 billion Paycheck Protection Program (PPP).
The review comes after U.S. Representative James Clyburn, a South
Carolina Democrat who is chairman of the Select Subcommittee on the
Coronavirus Crisis, pressed the SBA watchdog in a letter to investigate
the issue, citing the Reuters report.
The duplicate loan issue may have created "significant opportunities"
for fraud and potentially wasted more than $100 million in taxpayer
dollars, Clyburn said in the June 23 letter addressed to SBA Inspector
General Hannibal "Mike" Ware. He said it was "critical" to probe the
issue as soon as possible.
Representatives of the SBA did not respond immediately to a request for
comment on Tuesday.
The SBA launched the program on April 3 to help keep workers at
struggling businesses employed. In the race to get funds out the door,
the program encountered paperwork, technology and fairness issues.
[to top of second column] |
U.S. Rep. James Clyburn (D-SC) talks to reporters ahead of a vote in
the U.S. House of Representatives on a coronavirus economic aid
package on Capitol Hill in Washington, U.S., March 13, 2020.
REUTERS/Yuri Gripas
In the case of the duplicate loan approvals, a blind spot in SBA's loan
processing system failed to catch when some borrowers submitted
applications multiple times, typically through different lenders,
Reuters reported.
Lenders are still grappling with unwinding duplicate loans across
several banks and retrieving the cash where those loans have been
deposited, according to one person with direct knowledge of the matter.
The government has said it will only guarantee one loan per borrower,
which means lenders, rather than the taxpayer, are likely to be on the
hook for the error.
(Reporting by Chris Prentice in Washington; Additional reporting by Pete
Schroeder in Washington; Editing by Michelle Price and Matthew Lewis)
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