SBA Allocates $3.7 Billion in Improper Benefit Payments, Auditor’s Detection

A rushed emergency aid program for small companies devastated by the pandemic has sent nearly $3.7 billion to recipients who are prohibited from receiving federal funding, according to a government audit released Tuesday.

The finding adds to a body of evidence chronicling what Hannibal Ware, the Small Business Administration’s inspector general, has called “an unprecedented amount of fraud” in the agency’s pandemic relief efforts. Mr Ware’s office in October penalized agency for improperly distributing billions of dollars as benefits to self-employed persons who make “flawed or unreasonable” claims that there are additional workers on their payrolls.

The Economic Injury Disaster Loan program delivered more than $210 billion in loans and grants last year. Program Hastily organized by the Trump administration Millions of businesses have been temporarily closed due to the coronavirus and are designed to send money quickly to help companies keep up with their bills.

But according to Tuesday’s report from Mr. Ware’s office, the agency was unable to perform a legally required check of applicants’ credentials against the Treasury Department’s Make Payment system.

The Do Not Pay system was created in 2011 to reduce improper payments to people who have died, been convicted of tax evasion or have been barred from receiving federal contracts, among other red flags. Mr Ware found that despite matches in the system, 117,135 applicants who received grants and 75,180 recipients of loans were “highly likely” to have received payments.

Isabella Casillas GuzmanThe agency’s director in March said at a House hearing this month that the agency is increasing fraud controls over its Covid-19 relief programs. Last year, he said, “there were no railings” under the previous administration.

In a response included in Mr Ware’s report, the Small Business Administration said it began checking Make Payment records on April 6, 2021 – more than a year after the disaster loan program began – before sending funds. The agency also said it will review loans and grants made to recipients previously marked as ineligible.

“We agree with the SBA Inspector General that the Trump administration should implement this risk management tool, and that’s why the SBA did just that under the Biden-Harris administration,” agency spokesman Han Nguyen said in a statement on Tuesday. .

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