SBA Report Reveals Over $200 Billion in Federal Aid to Small Businesses During Pandemic May Have Been Given to Fraudsters

A new report from the Small Business Administration (SBA) has revealed that more than $200 billion in federal aid to small businesses during the pandemic may have been given to fraudsters.

The estimate is the highest yet for the $1.2 trillion released under the SBA’s Paycheck Protection Program and the Economic Injury Disaster Loan from March 2020 to January 2022.

The SBA Office of Inspector General found that the agency weakened or removed certain requirements designed to ensure only eligible businesses get funds as it rushed to distribute the funds. This allowed fraudsters to find vulnerabilities and coordinate schemes to bypass controls and gain easy access to funds meant for eligible small businesses and entrepreneurs adversely affected by the economic crisis.

The SBA has since implemented a number of measures to prevent fraud, including a loan review process and a fraud hotline. The agency has also worked with the Department of Justice to investigate and prosecute fraudulent activity.

The SBA is continuing to work to ensure that only eligible businesses receive funds and that fraudsters are held accountable. The agency is also encouraging small business owners to report any suspicious activity to the SBA Fraud Hotline.