The Small Business Administration’s Paycheck Protection Program has been rife with abuse and any automatic loan forgiveness program would exacerbate the situation, a government watchdog group warned Monday.
“We need a full accounting of where our taxpayer dollars went, not just an automatic forgiveness without any review,” Kyle Herrig, president of Accountable.US said. “Congress must ensure that the American taxpayer doesn’t end up on the hook for the program’s failures.”
As Congress begins work on the next version of coronavirus crisis economic stimulus legislation, credit union trade groups and others have endorsed legislation that would forgive PPP loans under $150,000. However, Herrig said the PPP program already lacks proper controls that would allow policymakers to evaluate the program.
The watchdog organization said the administration has said that the program still has $132 billion available to lend, adding that is evidence of the program’s failure, since as many as 110,000 small businesses have closed since the pandemic began.
The group said that the Trump Administration claims that the PPP has saved 51 million jobs have been widely disputed and that some companies that have been identified as having received loans have said they never applied for them.
Accountable.US said that any new PPP program should contain provisions ensuring the transparency needed to evaluate the program. The group said that in addition to disclosing what companies received loans, the government should be able to document how much money they received and whether the business is continuing to operate.
In addition, the group said that a revised PPP program should:
- Provide lenders with incentives to provide small businesses in underserved communities with access to credit.
- Enforce strict restrictions on the fee structure of banks to keep them from making excessive profits as a result of the small-business lending.
- Allow an audit of the PPP that cites data discrepancies and what steps are being taken to correct them.