US Pandemic Relief Program Mistakenly Paid $ 692 Million in Duplicate Loans – Watchdog –

US Pandemic Relief Program Mistakenly Paid $ 692 Million in Duplicate Loans – Watchdog

WASHINGTON (Reuters) – The U.S. Small Business Administration (SBA) mistakenly paid $ 692 million in duplicate small business aid loans due to technical errors and other errors, the SBA’s internal watchdog said on Monday. the agency.

U.S. President Donald Trump signs the Paycheck Protection Program and Healthcare Improvement Act’s Financial Response to the Coronavirus Disease (COVID-19) Outbreak, in the Oval Office of The White House in Washington, USA, April 24, 2020. REUTERS / Jonathan Ernst

Lenders participating in the Paycheck Protection Program (PPP) distributed cash to 4,260 borrowers who had already received funds due to multiple technical failures within the SBA’s loan processing systems, who were having difficulty processing loans. Loan volumes, the SBA Inspector General wrote in a report. .

Reuters first reported in June that technical problems had led the SBA to approve thousands of duplicate loans worth a potential hundreds of millions of dollars.

Under the program, lenders make government-backed loans to small businesses on behalf of the SBA. If borrowers use the funds for intended purposes, such as keeping staff employed, they keep the money and the government repays the lender.

The watchdog did not say how much, if any, of the $ 692 million wrongly distributed by lenders had subsequently been repaid by the government. He initially said that he would only guarantee one loan per borrower, which means that the lenders, rather than the taxpayer, may be on the hook for the error.

Reuters reported in June that lenders had been trying 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 expected the matter to be resolved in September.

The watchdog added that it did not see any evidence that borrowers intentionally exploited SBA systems to obtain multiple loans.

Amid the frenzied launch of the first-come-first-serve program last April, many borrowers applied with multiple borrowers to increase their chances of obtaining a loan.

An SBA computer program designed to detect such duplicate applications failed, the watchdog said. Additionally, the SBA system did not detect a request as a duplicate if the borrower’s Social Security number and employee identification number were changed on the second request.

At one point, the number of approved duplicate APP loans exceeded 40,000, but SBA officials were able to detect and resolve most of them before lenders disbursed the cash, the SBA Inspector General said.

Reporting by Pete Schroeder; Editing by Michelle Price and Peter Cooney


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