More than $200 billion in federal aid to small businesses during the pandemic may have been given to fraudsters, a report from the Small Business Administration revealed on Tuesday.
As the agency rushed to distribute about $1.2 trillion in funds to the Economic Injury Disaster Loan and Paycheck Protection programs, it weakened or removed certain requirements designed to ensure only eligible businesses get funds, the SBA Office of Inspector General found.
The fraud estimate for the EIDL program is more than $136 billion, while the PPP fraud estimate is $64 billion. In earlier estimates, the SBA inspector general said about $86 billion in fraudulent loans for the EIDL program and $20 billion in fraudulent loans for the PPP had been distributed. Stricter rules were put in place in 2021 to stem pandemic fraud, but"many of the improvements were made after much of the damage had already been done due to the lax internal control environment created at the onset of these programs," the SBA Office of Inspector General found.
Investigations into COVID-19 EIDL and PPP fraud have resulted in 1,011 indictments, 803 arrests, and 529 convictions as of May, officials said. Nearly $30 billion in funds have been seized or returned to the SBA.
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