SBA Oversight Failures Lead to $93 Million in Questionable Awards to Disadvantaged Firms, Internal Audit Finds

The Golden Horseshoe is a weekly designation from Just The News intended to highlight egregious examples of wasteful taxpayer spending by the government. The award is named for the horseshoe-shaped toilet seats for military airplanes that cost the Pentagon a whopping $640 each back in the 1980s.

This week’s Golden Horseshoe is awarded to the Small Business Administration, which awarded $93 million in questionable contracts to small businesses owned by socially and economically disadvantaged individuals under the agency’s 8 (a) Business Development Program, according to a recent audit by the SBA Office of Inspector General.

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Report Claims Unions Skirted Rules to Receive Paycheck Protection Program Loans

The Small Business Administration-administered Paycheck Protection Program paid out millions of dollars to ineligible unions, according to a new report released by the Freedom Foundation.

The Freedom Foundation investigated the SBA’s database of PPP loans, and concluded approximately 226 loans totaling $36.7 million were distributed to labor unions and affiliated organizations. The first round of PPP loans explicitly states such entities were ineligible for the government funds prior to March 11, 2021.

“The Small Business Administration knew as early as July 2020 that Paycheck Protection Program loans were being approved for unions that weren’t eligible to receive the funds,” Maxford Nelsen, Freedom Fund director of Labor Policy, told The Center Square.

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Small Business Administration Spends $14.8 Million in Questionable Costs for Underutilized Small Business Portal

U.S Small Business Administration

This week’s Golden Horseshoe is awarded to the Small Business Administration for lax oversight of a $25 million grant for the creation of a COVID-19 relief small business portal that ran up $14.8 million in questionable costs for an underutilized hub, according to a report by the agency’s Office of Inspector General.

The SBA’s Office of Entrepreneurial Development (OED) received $25 million through the CARES Act to create a portal to help small businesses during the pandemic. An $18.6 million grant was awarded for the Resource Partner Training Portal program, but the intended results were not achieved. A combination of a failed marketing strategy to let small businesses know of the portal’s existence and unsupported or unallowable invoices led the inspector general to question $14.8 million in costs.

“SBA did not did not ensure the grant recipient developed and implemented an effective marketing and outreach strategy to ensure the hub successfully achieved the legislative purpose of the CARES Act,” Inspector General Hannibal “Mike” Ware stated in the report.

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Small Business Administration Not Taking Direct Action Against Partner Lenders That Issued Billions in Fraudulent Paycheck Protection Program Loans

The Small Business Administration is not taking action against its partner lenders that issued billions of dollars in fraudulent Paycheck Protection Program forgivable loans, Just the News has learned.

Congress appropriated almost $1 trillion in forgivable PPP loans to assist businesses during the COVID-19 pandemic. Approximately 15% of the $961 billion is projected to have been obtained fraudulently, according to a study.

A House of Representatives panel estimated that $84 billion in PPP funds was issued fraudulently.

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Fraudsters Used Paycheck Protection Program Loans for Bentleys, Diamonds, Luxury Homes: Watchdog

woman on laptop with eye glasses and mug next to her

This week’s Golden Horseshoe goes to the Small Business Administration for millions in Paycheck Protection Program loans it issued to fraudsters who used the money to purchase luxury homes, high-priced jewelry and expensive cars, including a Bentley and two Lamborghinis, according to a watchdog report.

The Paycheck Protection Program had the highest percentage of cases of criminal activity of all the pandemic relief programs, according to the Pandemic Response Accountability Committee’s recent Semiannual Report to Congress.

“A total of 14 OIGs have indictments/complaints, arrests, and/or convictions from April 1, 2021, through September 30, 2021, related to the federal government’s COVID-19 pandemic response,” PRAC reported.

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Commentary: Did PPP Work?

As the Small Business Administration official who oversaw the Paycheck Protection Program, I’m often asked, “Did PPP actually work?”  

PPP was a response to state and local governments mandating shutdowns as a way to slow the spread of COVID-19. The premise was this: Encourage lenders to provide small businesses and nonprofits with forgivable, SBA-guaranteed loans over an eight-week period as a payroll-support measure. This small business financial support was designed to help prevent mass unemployment as Americans were confined to their homes.  

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SBA Hid Communications with Planned Parenthood Amid GOP Criticism Over PPP Loans

The Small Business Administration hid communications with Planned Parenthood regarding COVID-19 loans that Republicans say were illegal, emails obtained by the Daily Caller News Foundation show.

The SBA released heavily redacted emails between the agency, lenders and Planned Parenthood affiliates in response to a Freedom of Information Act request the DCNF filed in May 2020. GOP lawmakers had previously demanded an investigation into $80 million in Paycheck Protection Program (PPP) loans, saying they were obtained illegally.

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Ohio Man Indicted in Massive PPP Fraud Case

An Ohio man is one of five being indicted in a $4 million Payroll Protection Program (PPP) fraud case.

The accused allegedly submitted, or assisted in the submission of a fraudulent PPP loan for five businesses according to the indictment. Khalil Gibran Green Sr. of Cleveland claimed to be the sole owner of Impact Creations LLC, a company that claimed to have 67 employees and an average monthly payroll of $332,000 on a PPP application.

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SBA: 2.2 Million Loans, $175B Issued So Far in 2nd Round of Paycheck Protection Program

The Small Business Administration and the U.S. Treasury revealed Sunday that the second round of the Paycheck Protection Program has issued 2.2 million loans, totaling $175 billion.

PPP loans are forgivable loans for small businesses to offset some of the losses experienced by the response to the COVID-19 pandemic. The loans are meant to provide a direct incentive for small businesses to keep their workers on the payroll.

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