PPP paid over 4,000 businesses twice, government watchdog says - and they'll have to pay it back

PPP paid over 4,000 businesses twice, government watchdog says - and they'll have to pay it back
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  • The Paycheck Protection Program distributed more than one loan to over 4,000 borrowers in 2020.
  • From April to August, it issued 8,731 duplicate loans totaling about $692 million, a watchdog found.
  • Of the 4,260 borrowers, 2,689 had the same tax ID, and 1,571 had the same name and address.

The Paycheck Protection Program was established under the CARES Act to provide aid to small businesses suffering during the pandemic. But it turns out it provided too much aid.

A report released on Monday by the Small Business Administration's Office of the Inspector General said that of the PPP loans approved from April 3 to August 19, lenders made more than one loan disbursement to 4,260 borrowers: 2,689 with the same tax ID number, and 1,571 with the same business name and address.

Those disbursements involved 8,731 loans and totaled about $692 million, the report said.

The SBA said in the report that it would resolve duplications by recovering improper payments and preventing loan forgiveness on the duplicate loans. That means small businesses will have to give back the duplicate loans if they can.

The report said the SBA had identified issues in 2020 that caused duplicate loan applications to be processed. The SBA said it had turned off controls for its electronic loan-application system and would rely on loan reviews to eliminate duplicates, according to the report.


"Establishing strong controls to prevent improper or duplicate disbursements from occurring during initial loan processing is more effective than attempting to identify and resolve improper disbursements in the loan review phase," the report said. "SBA's efforts should focus on safeguarding funds up front, as it is more prudent and effective to prevent a loan from occurring than attempting to recover funds after the loan has been disbursed."

The OIG recommended that the SBA:

  1. Review the potential duplicate loans the OIG identified and recover improper payments.
  2. Review controls related to PPP loan reviews to ensure that duplicate loans are not forgiven.
  3. Strengthen the controls in the SBA's loan-servicing portal for future PPP-type programs.
  4. Strengthen controls and guidance for lenders to ensure that they meet program requirements.

The House Select Subcommittee on the Coronavirus Crisis had requested that the OIG review the vulnerabilities in the SBA's loan-processing system.

The PPP faced other issues shortly after it was implemented last March. In one instance, the fast-food chain Shake Shack received a $10 million loan, though the loans were intended for businesses with 500 employees or fewer. Shake Shack ultimately gave the money back.

Lawmakers have advocated the program and emphasized its importance in helping small businesses recover financially from the pandemic. The $1.9 trillion stimulus law that President Joe Biden signed on Thursday set aside billions of dollars for small businesses, with $7.25 billion to be used specifically for the PPP.


The House Small Business Committee on Thursday introduced legislation to extend the PPP - set to expire on March 31 - through May 31.

"The demand for PPP loans right now is a testament to the program's effectiveness and the lingering impacts of this pandemic," Rep. Nydia Velázquez, the chair of the committee, said in a statement. "That's why we cannot cut off aid now and this short-term extension is so important."