Celebrities receive loan forgiveness
Here’s another example of a program functioning as intended that seems to have benefitted the not-so-needy.
The Paycheck Protection Program (PPP), was designed to help businesses maintain their employee headcount. The funds were distributed as loans, however, they could be forgiven under certain conditions. An NPR analysis of SBA data released in January found that 92% of PPP loans were granted full or partial forgiveness.
Some businesses with rich owners were among those that got off the hook. Retired NFL quarterback Tom Brady’s sports nutrition company TB12, for example, received a PPP loan for $960,000, which has since been forgiven in full.
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Small business fraud
The Office of Inspector General (OIG) announced in June that it found the SBA may have paid out over $200 billion in fraudulent relief funds.
The OIG says 4.5 million potentially fraudulent claims were made through the SBA’s PPP and the COVID-19 Economic Injury Disaster Loans (EIDL) program.
The programs were created to help businesses stay afloat and pay their employees during lockdowns. The OIG believes that many of the PPP and EIDL scammers were part of organized crime rings who took advantage of the rapid rollout of the pandemic aid programs.
Several financial technology companies swooped in during the pandemic to help applicants fill out pandemic aid paperwork and process those requests on behalf of banks.
Some of these companies raked in billions of dollars in fees for facilitating PPP loans while turning a blind eye to fraudulent applications, according to a report released in December by the House Select Subcommittee on the Coronavirus Crisis.
For example, loan reviewers from one company, Blueacorn, told the subcommittee they were pressured to approve PPP applications that seemed suspicious, especially if they were high-dollar applications, the report says.
Blueacorn did not immediately respond to requests for comment from multiple news publications when the report was released.
Blueacorn received over $1 billion in taxpayer-funded processing fees, according to the report. But the subcommittee also believes tens of billions of dollars in PPP funds were likely handed out to fraudsters.
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