- U.S. Small Business Administration Office of Inspector General finds more than $3.6 billion in payments to potentially ineligible recipients in its COVID EIDL and emergency EIDL grant programs in 2020
- OIG recommends strengthening its controls to make sure only eligible recipients are approved for funding
- Previous reports from the OIG have also highlighted issues caused by a lack of controls as well as fraud risks
Summary by Dirk Langeveld
The U.S. Small Business Administration’s Office of Inspector General has issued a warning to SBA managers about “serious concerns” regarding improper payments in the COVID Economic Injury Disaster Loan program.
The OIG reported that its review of the Treasury’s analysis of processed COVID EIDL loans between March and November 2020 found that 75,180 loans totaling over $3.1 billion were made to potentially ineligible recipients. The review also determined that 117,135 emergency EIDL grants totaling more than $550 million were made to potentially ineligible recipients during this period.
The report blames a lack of adequate pre-award controls during the period for the issue. It notes how some of the questionable loans had already been identified in previous audits.
- Between the start of the COVID-19 pandemic and Nov. 5, 2020, a total of 3.6 million COVID EIDL loans totaling $190 billion and 5.78 million emergency EIDL grants totaling $19.7 billion were approved
- To be eligible for this assistance, businesses could not have any federal debarments or suspensions and were required to disclose any delinquent or defaulted federal loans or debts in the previous seven years
- The OIG recommends that the SBA reassess its controls to ensure that only eligible recipients are approved for funding, including batch match or continuous monitoring functions available in the Treasury’s Do Not Pay portal to identify potential ineligible recipients
- The OIG previously concluded that the EIDL Advance grant program overpaid sole proprietors and independent contractors by $4.5 billion, and warned of ongoing fraud risks in its annual report
- COVID EIDL is the only remaining COVID-19 relief program under the SBA, with the program set to expire at the end of the year