In any context, $78 billion is big money. When an agency report says that amount was sent to potentially fraudulent or ineligible recipients, well, there is likely a problem.
A Small Business Administration program, part of the initial business stimulus plan earlier this year, was designed to help entrepreneurs. But in a report released this week, the SBA appears to have been victimized.
The report from the Office of the Inspector General (OIG) found that the SBA approved up to $78 billion in COVID-19 help to accounts that differed from the original bank accounts listed on the loan applications, applicants using the same IP addresses, email addresses, bank accounts, or businesses listed at the same addresses and to potentially ineligible businesses.
SBA Inspector General Hannibal “Mike” Ward said the fraud was largely the result of haste in trying to deliver financial aid and, Ward wrote, the SBA “lowered the guardrails, which significantly increased the risk of program fraud.”
Again, from the OIG in the report: “We made 10 recommendations for SBA to strengthen its controls to lower fraud risk and recover funds from ineligible businesses … Overall, management stated it disagreed with the findings because there was insufficient evidence that loans were approved and disbursed to ineligible businesses. It is important to note that despite management disagreeing with the findings and only partially agreeing with nine of the recommendations, in most cases, the agency is taking corrective actions to fully implement our recommendations.”
According to Fox Business, SBA Administrator Jovita Carranza rejected the report in a letter, saying that it “grossly overstates the risk of fraud, waste and abuse,” adding that the SBA employed a “highly successful delivery of an unprecedented volume of disaster assistance.”
The agency distributed some $211 billion in loans over the course of the virus-induced crisis.