The Small Business Administration is still conducting thousands of investigations and could find further fraud, CBS News reported.
More than $200 billion in federal aid to small businesses during the COVID-19 pandemic may have been given to fraudsters, a damning new report from the Small Business Administration this week revealed.
The report says that the agency rushed to distribute about $1.2 trillion in funds to the Economic Injury Disaster Loan and Paycheck Protection programs. In doing so, it weakened or removed certain requirements designed to ensure only eligible businesses get funds, the SBA Office of the Inspector General found.
"The pandemic presented a whole-of-government challenge," Inspector General Hannibal "Mike" Ware said in the report, according to CBS News. "Fraudsters found vulnerabilities and coordinated schemes to bypass controls and gain easy access to funds meant for eligible small businesses and entrepreneurs adversely affected by the economic crisis."
The report also says that the agency estimates they disbursed over $200 billion in potentially fraudulent COVID-19 Economic Injury Disaster Loan, Economic Injury Disaster Loan Targeted Advances, Supplemental Targeted Advances, and PPP loans. Meaning at least 17 percent of all COVID-19 Economic Injury Disaster Loan and Paycheck Protection Program funds were disbursed to potentially fraudulent actors.
"The agency weakened or removed the controls necessary to prevent fraudsters from easily gaining access to these programs and provide assurance that only eligible entities received funds," the report says. "However, the allure of 'easy money' in this pay and chase environment attracted an overwhelming number of fraudsters to the programs."
The Small Business Administration is still conducting thousands of investigations and could find further fraud, CBS News reported.
The SBA has discovered more than $400 billion worth of loans given during the pandemic that require further investigation, CBS News reported.
