Virtually all PPP loans are exempt with limited scrutiny

A barber shop in Cleveland that closed in May 2020. As the coronavirus outbreak raged and the first round of the government’s multi-billion dollar Paycheck Protection program neared its end, small businesses were stuck.

Tony Dejak/AP


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Tony Dejak/AP


A barber shop in Cleveland that closed in May 2020. As the coronavirus outbreak raged and the first round of the government’s multi-billion dollar Paycheck Protection program neared its end, small businesses were stuck.

Tony Dejak/AP

As COVID-19 shutdowns threatened businesses in 2020, the US government began issuing nearly everything. $800 billion With Paycheck Protection Program loans that may be permissible. This program Small and medium-sized enterprises Keeping workers on staff during the early uncertain times of the pandemic.

More than two years later, the overwhelming majority of these loans have turned into government subsidies, as 91% have been fully or partially forgiven, according to an NPR analysis of data released Oct. 2 by the Small Business Administration. rice field.

The SBA expects this figure to reach nearly 100% as more forgiveness requests are processed this fall.

it is despite claims from Researcher at the University of Texas About 1.4 million PPP loans show signs of possible fraud, such as suspiciously high salaries and multiple companies listed at the same address. SBA disputes these findings, but has its own the inspector presumed It said at least 70,000 loans could be fraudulent.

Meanwhile, the SBA closely scrutinizes a small percentage of millions of PPP loans for fraud and forgiveness eligibility. SBA senior official Patrick Kelly said the SBA uses computer models to review all 11.4 million loans, but auditors have manually reviewed only about 215,000 loans. and only about 2% of the total issued.

And only about 21,000 of those rigorous field studies were denied forgiveness, Kelley says, accounting for only about 0.2% of all loans issued.

Whose loan is not allowed yet?

Of the 11.4 million PPP loans, about 1 million are still disallowed. The majority of these unauthorized loans are held by sole proprietors and independent contractors. That is, sole proprietorships that are specifically targeted in later rounds of the program. Many work in service jobs that have been hit hard by COVID-19, such as barbers, janitors, and Uber drivers.

Many of these companies, which received loans through financial technology firms rather than traditional banks, told NPR they had a very difficult time getting forgiveness.

Fintech, as it is known, is a business that uses new technologies to provide financial services.

One fintech called Kabbage is class action lawsuit Over allegations of failure to process loan forgiveness applications promptly and properly. Kabbage filed for bankruptcy last week.

NPR reached out to dozens of these small businesses with outstanding loans and asked a variety of reasons why they were being disallowed, including missing emails, failed applications, and bad advice from accountants. I was.

However, the SBA said some of these PPP borrowers simply have not yet applied for the waiver as they can wait up to five years after the loan is issued to apply.

and Senate Committee Hearings In August, Kelly said the SBA had already processed forgiveness decisions for about 97% of loans issued in the program’s first year, 2020. The remaining loans will be forgiven this fall. It’s a schedule.

Sierra Lyons contributed reporting for this article.

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