A government watchdog said the Small Business Administration SBA handed $684 million worth of Paycheck Protection Program PPP loans to scores of nonprofit organizations that may not have been eligible to receive the money during the COVID-19 epidemic.
179 nonprofits may have too large to qualify for the loans, which were designed for groups with fewer than 500 employees or were relatively small compared to others in their field, according to the SBA's Office of Inspector General OIG. The report said one group, the YMCA of the Rockies, received more than 3.5 million in PPP loans that it should not have received because it had more than 500 employees at the time it applied.
The SBA recommends that the 179 PPP loans, totaling approximately $684 million, be reviewed to make sure eligibility requirements are met, and seek remedy or repayment for all loans considered ineligible, and seek a refund of the PPP loan we reviewed for YMCA, totaling $3.5 million, the OIG said.
Investigators examined another PPP loan worth $3.8 million to Planned Parenthood of Illinois, but determined that this group qualified for the loan. A third loan worth more than $6 million to Goodwill of Southwestern Pennsylvania should not have been made, but Goodwill later became eligible for compliance when PPP loan guidance was changed.
The federal government made more than 800 billion dollars of loans to companies and nonprofits during the epidemic so they could continue to make payroll after government officials imposed restrictions on a broad range of economic activity. The OIG stated that 98% of the $35 billion in PPP loans made by SBA were discharged.
SBA said it would review 27 of all the 179 questionable loans, while the OIG asked SBA to look at all 179 questionable loans. OIG said it would push for a full review. The OIG report said that we will try to reach agreement with management on this unresolved recommendation in accordance with our audit follow-up policy.
The PPP loans are under scrutiny as both Republicans and Democrats acknowledge that the program is vulnerable to fraud. This month, Senator. Dick Durbin, D-Ill., said he thought a lot of PPP funding was wasted and stolen, and said someone appears to have received loans under his son's name for the Durbin Construction Co.
Durbin Construction Co. hasn't said anything. Somebody had stolen his identity and secured a $140,000 loan. In Illinois, more than a dozen people were arrested last week who tried to bond out of jail using PPP loans. The federal agencies have identified 25 people who were facing felony charges while applying for PPP loans for fake businesses.