How the SBA’s Pandemic Assistance Programs Were Exploited

by | Aug 1, 2023 | Business Finance, Resources, SBA | 0 comments

How the SBA's Pandemic Assistance Programs Were Exploited

The SBA’s Pandemic Assistance Programs and Fraud

The Small Business Administration (SBA) has come under fire for handling COVID-19 aid programs, which have allegedly been exploited by professional crooks, violent criminals, and even incarcerated felons. The agency has been accused of distributing billions of dollars without basic background checks or verifying application details.

These programs have inadvertently fueled illegal activities, including violent street crimes. The SBA’s Paycheck Protection Program (PPP), designed to help small businesses maintain their workforce during the pandemic, reportedly funded the criminal operations of several street gangs. Furthermore, other fraudulent recipients used funds to finance personal luxuries and illegitimate businesses.

Unchecked and Unverified: The Scale of Fraud

The SBA may have distributed more than $200 billion in suspected fraudulent pandemic recovery grants and loans to 4.5 million scammers since 2020, per the SBA Office of Inspector General (OIG). In several cases, even applications with missing and illogical information were approved.

The program’s ‘first come, first serve’ basis meant that funds were quickly depleted, causing many eligible businesses to miss out. Funds from the Restaurant Revitalization Fund were also reportedly misappropriated, leaving numerous struggling establishments without support.

Government Response and Need for Accountability

Despite the scale of the scandal, the SBA has attempted to downplay the severity by insisting it only gave $36 billion to fraudsters. Furthermore, the agency has decided not to recover money still owed on pandemic loans under $100,000.

The Biden administration has also obstructed efforts to recover these funds by limiting the authority of the Special Inspector General for Pandemic Recovery over SBA programs.

In response to these allegations, the author calls for the SBA to collect all funds owed to taxpayers and proposes the passage of the Strengthening Taxpayers Recoveries Act. This Act aims to extend and expand the jurisdiction of the Special Inspector General to uncover more fraud. The author insists on full accountability and reforms within the SBA to prevent such mishaps in the future.

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