WASHINGTON (Reuters) – The U.S. Small Business Administration (SBA) erroneously paid $ 692 million in duplicate loans to help the small business pandemic due to technical and other errors, it said Monday the agency’s internal surveillance dog.
Lenders participating in the Salary Protection Program (PPP) distributed cash to 4,260 borrowers who had already received funds due to multiple technical issues within the SBA’s loan processing systems, which had difficulty process loan volumes, the SBA inspector general wrote.
Reuters first reported in June that the technical snafus had led the SBA to approve thousands of potentially duplicate loans worth hundreds of millions of dollars.
Under the program, lenders provide government-backed loans to small businesses on behalf of the SBA. If borrowers use the funds for the intended purposes, such as keeping staff busy, they keep the money and the government pays them the lender.
The watchdog did not say how much of any of the $ 692 million wrongly distributed by the lenders had been subsequently reimbursed by the government. Initially, he said he would only guarantee one loan per borrower, meaning that lenders, rather than the taxpayer, could be caught by the mistake.
Reuters reported in June that lenders had tried to recover duplicate loans from borrowers.
In response to Monday’s report, SBA officials said the agency would mark all suspected duplicates for further review and hoped to resolve the matter in September.
The watchdog added that he saw no evidence that borrowers intentionally exploited SBA systems to obtain multiple loans.
Amid the frantic launch of the first-come, first-served program last April, many borrowers filed applications with several borrowers to increase their chances of getting a loan.
An SBA computer designed to detect these duplicate applications failed, the vigilante said. In addition, the SBA system did not detect any application as a duplicate if the Social Security number and employee identification number of the borrower were changed to the second application.
At one point, the number of approved duplicate PPP loans exceeded 40,000, but SBA officials were able to locate and resolve most of these before lenders disbursed the cash, the inspector said. general of the SBA.
Pete Schroeder Reports; Edited by Michelle Price and Peter Cooney