WASHINGTON (Reuters) – The US Small Business Administration’s internal watchdog has launched an investigation into a technical flaw that has prompted many small businesses to receive duplicate loans through a federal coronavirus aid program.
A spokesman for the SBA Office of the Inspector General confirmed that the office began a review of the issue, which Reuters reported last month may have led to hundreds of millions of dollars in duplicate loans being approved under the Check Protection Program. Payment of $ 660 billion (PPP)
The review came after US Representative James Clyburn, a South Carolina Democrat who is chairman of the Select Coronavirus Crisis Subcommittee, lobbied the SBA watchdog in a letter to investigate the issue, citing the Reuters report.
The issue of duplicate loans may have created “significant opportunities” for fraud and potentially wasted more than $ 100 million in taxpayer dollars, said Clyburn in the June 23 letter to SBA inspector general Hannibal “Mike” Ware. He said it was “critical” to investigate the problem as soon as possible.
SBA officials did not immediately respond to a request for comment on Tuesday.
The SBA launched the program on April 3 to help retain employees in struggling companies. In the race to raise funds, the program encountered problems with paperwork, technology and justice.
In the case of duplicate loan approvals, a blind spot in the SBA’s loan processing system failed when some borrowers submitted applications multiple times, usually through different lenders, Reuters reported.
Lenders are still struggling to cancel duplicate loans at several banks and recover the money where those loans were deposited, according to a person with direct knowledge of the matter.
The government has said it will guarantee only one loan per borrower, meaning that creditors, not the taxpayer, are likely to be held responsible for the error.
Reporting by Chris Prentice in Washington; Additional reporting by Pete Schroeder in Washington; Editing by Michelle Price and Matthew Lewis