WASHINGTON – Computer errors caused the government to distribute duplicate loans to thousands of borrowers under the Trump administration’s program to rescue companies from the economic devastation of the coronavirus pandemic.
While the Pay Check Protection Program has been the subject of fraud, the revelations contained in a new report by the inspector general of the Small Business Administration speak of a flawed – and expensive, implementation.
The aging of federal technology may have hampered the SBA’s inability to track and cross loans. Two years ago, the Government Accountability Office found that information systems across the federal government were very out of date. Some SBA computer hardware was a decade old, the investigation found.
A series of malfunctions occurred in the spring and summer of 2020, resulting in the inadvertent distribution of millions of taxpayer dollars as duplicate loans. Altogether, found SBA Inspector General Mike Ware, banks authorized to issue PPP loans “made more than one PPP disbursement to 4,260 borrowers, which totaled about $ 692 million and involved 8,731 PPP loans”.
The companies were allowed to apply for PPP loans with several banks; it was the duty of the SBA to make sure that, if a borrower had an order with a bank, the orders before any other bank were withdrawn. If the SBA did not alert a bank that one of its potential borrowers had other applications pending, that borrower would have no barrier to securing multiple loans.
At least 104 borrowers received three or more loans. One borrower received 17 loans from the federal government, for a total of $ 1.3 million. It was unclear who was the beneficiary of 17 loans or how the borrower managed to secure so many loans when other potential borrowers struggled to win a single premium through the company bailout program.
An official in the SBA inspector general’s office declined to disclose information about this borrower or whether he was being investigated by the agency. That employee confirmed to Yahoo News that the 17 loans were not separate franchises from a large corporate network, in which case the loans would have adhered to the program guidelines.
The SBA tried to recover some of the duplicate loans, but was unable to tell its inspector general to what extent it managed to recover the funds.
The SBA declined to go into detail about the inspector general’s findings. “We have nothing further,” spokeswoman Carol Wilkerson told Yahoo News in a text message.
Disclosures about widespread problems with the initial round of PPP loans come when President Biden and Vice President Kamala Harris travel across the country to publicize the newly approved $ 1.9 trillion Redemption Plan, which has a component of own corporate relief, including a new $ 28.6 billion Fund to help restaurants.
Congress is also moving to extend the PPP for another two months, giving companies more time to register.
The logistical challenges that seem to have frustrated the previous administration may affect the current administration as well, although the SBA said that the problems pointed out by the inspector general have been corrected. The prospect of massive errors arises whenever large amounts of money are disbursed, no matter who the president is. The Obama administration’s Troubled Asset Relief Program, designed to rescue the American economy after the 2007-08 financial crisis, faced similar scrutiny.
Critics of the Trump administration took advantage of the new report as evidence of how much damage the 45th president was able to inflict on the federal government before stepping down in January. “This money was intended for small businesses struggling to keep the lights on, not large corporations, cheaters and cheaters,” said Kyle Herrig, head of the Accountable.US watchdog group. “But given the Trump administration’s insistence that banks and companies could self-regulate, it’s no surprise that so much fraud and negligence has escaped through the cracks.”
Proponents of Trump’s small business bailout efforts say the goal was to move billions of dollars to thousands of companies at unprecedented speed in the midst of a pandemic. Mistakes were inevitable, advocates say, and show no abuse or incompetence.
The duplicate loans in question were made between April and August 2020, when the Trump administration first implemented the PPP program, which initially received $ 349 billion by Congress in the coronavirus relief bill.
Sometime on April 30, an SBA computer script designed to quickly process a large number of loans did not work well. The malfunction prevented the system from checking when a company had applied for a loan from more than one bank. When the computer script worked correctly, each PPP candidate was given a single loan to be considered by the 5,460 participating banks.
The error persisted for about 14 hours before SBA employees detected and corrected the relevant code. Since the SBA was facing a large backlog of applications, employees decided not to go back and correct any duplicate loan applications processed during that 14-hour period. This means that thousands of candidates have had an extra opportunity – or several extra opportunities in some cases, and 17 extra opportunities in one case – with funds that others did not have.
There was another error, this one related to an SBA computer program known as E-Tran. This program should eliminate all duplicate loan applications by comparing tax identification numbers and other information submitted by companies. For thousands of applicants, E-Tran was unable to identify that a company had submitted more than one application.
In all, the federal government provided 5.2 million PPP loans; the 8,731 duplicate loans represent an unusual value. However, the ease with which some borrowers saw their fortunes doubled sharply contrasts with the experiences of many colored people who own businesses, who said they were marginalized and did not receive the same access to credit as white homeowners. The analysis of PPP loans supported these charges.
The Biden government has pledged to fix racial and other inequalities with regard to the reach of small businesses, but it will have to work more or less with the same technological infrastructure as Trump. (The SBA has pledged not to use mass-processing programs again.)
Ware’s investigation was conducted at the request of a Congressional coronavirus subcommittee. The chairman of that subcommittee, Dep. James Clyburn, DS.C., said the new report was “further evidence of the poor implementation of the PPP by the Trump administration, which ignored Congress’ intention to fail to obtain vital assistance for small businesses. most in need “.
Illustration of the miniature cover photo: Yahoo News; photos: AP, Getty Images
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