The U.S. Small Business Administration said a new review estimated that $36 billion of $1.2 trillion disbursed through its four largest pandemic relief programs was likely obtained fraudulently. The agency described the figure as funds it suspects are fraudulent and has referred, or expects to refer, to law enforcement—not a final adjudication of every case. It estimated that 86 percent of the fraudulently obtained loans originated in the first nine months of the initial programs. [story-s1]
SBA said controls introduced in 2021 for the Paycheck Protection Program and COVID-19 Economic Injury Disaster Loan program included checking applications against Do Not Pay databases, validating COVID-EIDL applications with tax transcripts, and creating a Fraud Risk Management Board. Across its four largest programs, it said screening blocked more than 21.3 million applications representing $511 billion retained, including duplicate, ineligible, and attempted-fraud applications. [story-s1]
The agency contrasted the earlier programs with two large relief programs designed and launched in 2021: it estimated likely fraud rates of 0.33 percent for the Shuttered Venue Operators Grant program and 0.75 percent for the Restaurant Revitalization Fund. For future emergencies, the report recommended expanding access to government data for upfront validation, preparing legal and operational frameworks in advance, and emphasizing prevention before funds are distributed. These figures and recommendations are SBA’s own report findings, not an independent audit presented in the release. [story-s1]
Source documents
- U.S. Small Business Administration Releases Report on Anti-Fraud Control Measures in Pandemic Relief Programs | U.S. Small Business Administrationhttps://www.sba.gov/article/2023/06/27/us-small-business-administration-releases-report-anti-fraud-control-measures-pandemic-relief