The US Pandemic Aid Program has mistakenly paid $ 692 million in double loans: Watchdog

WASHINGTON (Reuters) – The US Small Business Administration (SBA) falsely disbursed $ 692 million in double pandemic small business loans due to technical and other errors, the agency’s internal watchdog said Monday.

Lenders participating in the Paycheck Protection Program (PPP) distributed the money among 4,260 borrowers who had already received money due to multiple technical glitches in the SBA’s loan processing systems, who were struggling to process the volumes of loans, the inspector general wrote. the SBA in a report.

Reuters first reported in June that tech snafus had led the SBA to approve thousands of double loans that could be worth hundreds of millions of dollars.

Under the program, lenders provide government-backed loans to small businesses on behalf of the SBA. If borrowers use the money for intended purposes, such as hiring employees, they keep the money and the government pays back the lender.

The watchdog did not say how much of the $ 692 million falsely distributed by lenders was later repaid by the government. Initially, it said it would only guarantee one loan per borrower, meaning lenders, rather than the taxpayer, could make the mistake.

Reuters reported in June that lenders had been trying to get back double loans from borrowers.

In response to Monday’s report, SBA officials said the agency would flag all suspected duplicates for further review, expecting the matter to be resolved by September.

The watchdog added that it did not see any evidence that borrowers were deliberately misusing SBA systems to obtain multiple loans.

Amid the frenzied first-come, first-served launch in April last year, many borrowers have applied to multiple borrowers to increase the likelihood of getting a loan.

An SBA computer program intended to detect such duplicate applications has failed, the watchdog said. In addition, the SBA system did not detect an application as a duplicate if the borrower’s Social Security number and employee identification number were mixed up on the second filing.

At one point, the number of approved double PPP loans was over 40,000, but SBA officials were able to track down and fix most of them before the lenders paid out the money, the SBA’s inspector general said.