SBA didn’t reach out to rural, underserved for PPP loans: OIG

Small, disadvantaged firms not prioritized as intended

      The Small Business Administration fell short in its guidance on implementing the Paycheck Protection Program (PPP), including a failure to reach out to rural and underserved small business owners, the SBA’s Office of Inspector General concluded in a new report on May 8.

      Congress approved $670 billion in taxpayer funding for the PPP to offer partially forgivable loans to American businesses to help them cope with the coronavirus crisis.

      The SBA issued 7 Interim Final Rules to carry out the PPP. As of May 6, $526 billion had been obligated.

      The legislation ordered priorities for small businesses in rural and underserved markets, including those owned by veterans, women and minorities. However, SBA’s guidance did not do so, the OIG report stated.

      “We did not find any evidence that SBA issued guidance to lenders to prioritize the markets indicated by the Act,” the OIG wrote in the report, adding that as a result, “these borrowers, including rural, minority and women-owned businesses may not have received the loans as intended.”

      Furthermore, since SBA did not ask for demographic data from borrowers, it likely won’t be possible to determine how much loan volume eventually went to the rural and underserved groups, the OIG added.

      The OIG recommended that the SBA issue guidance for the rural and underserved markets, including collection of demographic data, for any future lending under the PPP.

      The inspector general also identified problems and gaps in the SBA’s guidance regarding loan forgiveness and loan deferments. Also, the review found that the SBA did not register the loans by Taxpayer Identification Number as it was required to do.

      The report did not have a response from SBA. However, in partially explaining the SBA’s actions, the OIG noted that the PPP far exceeded the SBA’s usual lending volume. SBA lenders approved “an amount representing more than 20 times the largest year in SBA’s history in just 33 days,” the OIG wrote.

      SBA officials were not immediately available.

More Information:
OIG report: https://bit.ly/2WEElls

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