SBA to Expedite PPP Loans Despite Fraud Risks
As January came to a close, The U.S. Small Business Administration pledged to improve the loan review process for the Paycheck Protection Program loans, even with the growing number of fraud complaints. The SBA is attempting to allow small businesses as much time a possible to access needed PPP funds by taking steps to smooth the path for reviews of “first draw” loans.
In December 2020, Congress renewed the business lending program with an additional $284 billion in funding. Due to the introduction of the PPP loans included in the CARES Act last March, accountants were able to help small business clients procure loans and apply for forgiveness of the debt. However, there are obstacles that many businesses faced while trying to access the loans and navigating their ever-changing rules and procedures. These struggles were especially evident within the first round of funding when Congress had to renew the program allowing for more funding.
The SBA is committed to addressing issues more efficiently and ensure that there is fair and equitable access to the PPP loans for small businesses in every community. The program is intended for small businesses to provide loans that will be forgiven if they retained their employees for up to 8 weeks, but many larger companies and organizations ended up claiming the majority of the money. Another group that many small businesses had to compete with were those making fraudulent claims about being a small business. For instance, there was an individual who claimed he had a small business and 50 employees. It was discovered he used PPP loan funds to buy a Lamborghini Huracan.
In response to those false claims, the SBA set up safeguards to avoid fraudulent claims; but this has proven to be a huge obstacle for small businesses. The SBA and Biden administration are working together to identify immediate solutions to promote transparency and to address eligibility, compliance and integrity.
The SBA will be hosting a nationwide call with a group of leaders to explain additional details they will need to provide to help resolve any first draw PPP loan reviews and potential holds that are affecting second draw approvals. Meanwhile, the SBA is also working on easing the review process for second draw loans so that can be processed in a more efficient way. They are equipping their field team of lender relation specialists with the information needed for appropriate responses to resolve problems and the SBA is going to provide extra guidance to PPP lenders on the review and resolution process.
Talley’s professionals have spent hundreds of hours reviewing the law, regulations, and SBA PPP FAQs issued on an almost daily basis and we are happy to assist you in the process. We are available to simply answer a quick question or assist in the application and/or forgiveness audit process.