SBA Gave Out $4.5 Billion in Needless EIDL Loans in 2020


The Office of Inspector General found the Small Business Administration (SBA) provided $4.5 billion more in Emergency EIDL grants to sole proprietors and independent contractors. This was much more than these individuals were entitled to.



$4.5 Billion in Needless EIDL Loans Given to Businesses During Pandemic

The inspection report by the Office of Inspector General looked at Emergency EIDL grants to sole proprietors and contractors. And it determined 542,897 sole proprietors claimed more than one employee on their applications. They also received a grant of more than $1,000 while applying for the Emergency EIDL grants without an Employer Identification Numbers (EIN).

The Inspector General goes on to say the absence of an EIN should have alerted the SBA because they should not have claimed any employees. If that was the case, the total for the 543,000 applicants should have been $543 million, which comes out to $1,000 per applicant. However, the SBA approved a total of $4 billion in Emergency EIDL grants. This comes out an over disbursement of $3.5 billion to these sole proprietors.

As for the independent contractors, the Inspector General found 161,197 received a grant of more than $1,000. They also applied without providing an EIN number while claiming more than 1 employee on their COVID-19 EIDL application.

The total for the independent contractors was supposed to be a maximum of $161 million ($1,000 per applicant). However, the SBA over disbursed independent contractors $1.1 billion dollars, which is over by $1 billion.

Absurd Claims by Sole Proprietors and Independent Contractors

In the Inspector General report, 15 sole proprietorships claimed to have a million employees. Not only that, but they didn’t provide an EIN on the application. Another 40 applicants claimed to have more than 100,000 employees and they also didn’t have EIN. And close to 350 claimed they had more than 500 employees also without EIN.

A point of comparison; Amazon employs 1.3 million people. When 15 sole proprietors claimed they had 1 million employees, flags should have been waving wildly. The report says even though this should have alerted the SBA, it did not have controls in place to flag these glaring discrepancies.

Read the SBA Inspector General Inspection Report.

Missed Opportunities

The report concludes by saying the $4.5 billion overage in Emergency EIDL grants to sole proprietors and independent contractors could have been given to small businesses that truly deserved it. Thousands if not millions of eligible small businesses would have benefited from these funds.

Considering there were more than 6 million applicants in the process who were eligible for a grant but had not received one because the funds ran out in early July 2020, it is frustrating, to say the least. The report also says, more than 7.3 million applicants later applied for an EIDL loan. However, they could not request a grant because the funds were exhausted.

Image: Depositphotos






Source link

Articles You May Like

Fixed-income titan Pimco is starting to embrace cryptocurrencies, CIO says
Google Search Rival Ecosia Launches $405 Million VC Fund to Back Climate Tech Start-Ups
CNBC’s Sustainable Future Forum Europe: Technology & Innovation
Stocks Making the Biggest Moves Midday: Tesla, PayPal, Pinterest and More
Tesla-Hertz EV Deal Is Climate Change Tipping Point for National Car Rental Fleets