The U.S. Small Business Administration (SBA) erred in paying $ 692 million in duplicate small business pandemic relief loans because of technical glitches and other mistakes, the agency’s internal watchdog said Monday.
Lenders participating in the Paycheck Protection Program (PPP) have distributed money to 4,260 borrowers who have already received funding due to numerous technical glitches within the SBA’s debt processing systems, which are struggling to process volume of loans, the SBA Inspector General wrote in a report.
Reuters first reported in June that technical snafus led the SBA to approve thousands of duplicate loans potentially worth hundreds of millions of dollars.
Under the program, lenders place government -supported loans to small businesses on behalf of the SBA. If borrowers use the funds for intended purposes such as maintaining staff employment, they keep the money and the government pays the lender.
The watchdog did not say how much if any of the $ 692 million mistakenly distributed by lenders was subsequently paid by the government. It first said it could only guarantee one loan per borrower, meaning lenders, rather than the taxpayer, could be on the hook for error.
Reuters reported in June that lenders were trying to take out double -digit loans from borrowers.
In response to Monday’s report, SBA officials said the agency will flag all suspected duplicates for further review, and expects to resolve the matter in September.
The watchdog added that it did not find any evidence that borrowers deliberately exploited SBA systems to obtain multiple loans.
Amid the dense launch of the first-come, first-served program in April, many borrowers have applied to multiple borrowers to increase the chances of getting a loan.
An SBA computer program is meant to identify such duplicate applications that have failed, the watchdog said. In addition, the SBA system does not detect an application as a duplicate if the borrower’s Social Security number and the employee’s identification number are transferred to the second application.
At one point, the number of approved duplicate PPP loans exceeded 40,000, but SBA officials saw and resolved most of those before the lenders delivered the money, the SBA Inspector General said.
(Reporting by Pete Schroeder; Editing by Michelle Price and Peter Cooney)
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