An emergency relief program hastily rolled out in the early days of the pandemic had such poor fraud protections that it improperly doled out nearly $4.5 billion to self-employed people who said they had additional workers — even those who made wildly implausible claims, like having 1 million employees. The $20 billion program, called the Economic Injury Disaster Loan Advance, offered small businesses immediate grants of up to $10,000 in the months after the pandemic shuttered much of the economy. But hundreds of thousands of the grants it made were inflated because there was no system to catch applications with “flawed or illogical information,” Hannibal Ware, the Small Business Administration’s inspector general, wrote in a report. The report, which described how the agency could have spotted obviously bogus applications by taking even rudimentary steps to prevent fraud, was the latest black eye for the SBA, a small department that was thrust to the front lines of the government’s pandemic response.
The agency also ran the Paycheck Protection Program, which gave out $800 billion in bank-issued loans but often left lenders and borrowers scrambling to comply with confusing and shifting rules. Fraud was a problem there, too: Tens of billions of dollars may have been taken improperly. The loan-advance grants were created by Congress in March 2020 as part of its first coronavirus aid package. Intended to quickly get money to devastated companies, the program offered grants to businesses that applied for a disaster loan — and allowed applicants to keep the money even if their loan request was rejected. In the 14 weeks the program operated before it ran out of money, nearly 5.8 million applicants received grants based on their company’s head count: $1,000 each for up to 10 workers. Sole proprietors and independent contractors who employed only themselves should have collected a maximum grant of $1,000 — but many collected bigger checks.
If you’re struggling financially as a result of the COVID-19 pandemic, we can help. Call us at 816-524-4949 or visit our website for a consultation to determine your best option.