US pandemic rescue program erroneously paid $ 692 million in duplicate loans: watchdog

WASHINGTON (Reuters) – The US Small Business Administration (SBA) has mistakenly paid $ 692 million in duplicate loans to help small business pandemics due to technical errors and other mistakes, the agency’s internal oversight body said on Monday. .

Creditors participating in the Wage Protection Program (PPP) distributed cash to 4,260 borrowers who had already received funds due to multiple technical errors in SBA loan processing systems, which struggled to process loan volumes, he wrote. the SBA inspector general.

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

Under the program, creditors provide government loans to small businesses on behalf of the SBA. If the borrowers use the funds for the purposes mentioned, such as retaining the staff, they keep the money and the government pays the lender.

The watchdog did not say how much if any of the $ 692 million wrongly distributed by creditors was later reimbursed by the government. Initially, he said he would guarantee only one loan per borrower, which means that creditors, rather than the taxpayer, could be in the face of error.

Reuters reported in June that lenders had tried to recover duplicate loans from lenders.

In response to Monday’s report, SBA officials said the agency would signal all suspected duplicates for further review and expects the issue to be resolved by September.

The watchdog added that it saw no evidence that borrowers intentionally exploited SBA systems to obtain multiple loans.

Amid the frantic launch of the first-come, first-served program in April last year, many borrowers have applied with several borrowers to increase their chances of getting a loan.

An SBA computer program designed to detect such duplicate applications has failed, the watchdog said. In addition, the SBA did not detect a request as a duplicate if the borrower’s social security number and employee identification number were changed in the second application.

At one point, the number of approved duplicate PPP loans exceeded 40,000, but SBA officials were able to identify and resolve most of them before lenders pay cash, the SBA inspector general said.