The Small Business Administration relaunched its coronavirus loan program on Monday as its watchdog warned once again about the potential for fraud in the program.
The COVID-19 deal, paired with the fiscal 2021 spending package that was enacted late last month, included $284 billion to restart the program for the third time. The program allows lenders, on the federal government’s behalf, to give out loans (that can be forgiven) to cover payroll and other expenses. SBA has distributed $525 billion through more than 5 million loans, Reuters reported on Monday. The SBA inspector general has repeatedly warned about possible fraud in the program since its initially chaotic rollout last April. This time, the agency and Congress sought to remedy some of those issues as well as better serve minority-owned businesses, one of the areas in which Democratic lawmakers and watchdog groups had criticized the agency.
“The opening of the SBA loan system is designed to efficiently and effectively implement the ‘Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act’ and to ensure increased access to the [Paycheck Protection Program] for minority, underserved, veteran and women-owned small business concerns,” the agency stated. “SBA also is calling upon its lending partners to redouble their efforts to assist eligible borrowers in underserved and disadvantaged communities.”
SBA gave first access to the loan portal to community financial institutions, which include community development financial institutions, minority depository institutions, certified development companies and microloan intermediaries, who represented about 10% of all loan lenders in 2020. This was for first-draw applicants, meaning they didn’t receive a Paycheck Protection Program loan before the port ..