PPP report flags potential fraud, abuse

Following Tuesday’s hearing with Treasury Secretary Steven Mnuchin, the House Select Subcommittee on the Coronavirus Pandemic released a preliminary analysis of the paycheck protection program (PPP), which found that “billions of dollars in PPP loans may have been diverted to fraud, waste, and abuse.”

Administered by the Small Business Administration (SBA) in coordination with the Treasury Department, the PPP was created by the CARES Act and launched with $349 billion in funding April 3. After depleting initial funding less than two weeks after applications opened, Congress provided another $320 billion for the program, with several NAFCU-sought set asides for smaller lenders such as credit unions and Community Development Financial institutions.

The program’s authorization expired Aug. 8 with roughly $134 billion in funds still remaining. Congress is currently considering ways to continue and improve the program, including by allowing certain borrowers to take out a second PPP loan and simplifying the forgiveness process, which could be included in a Phase 4 coronavirus relief package.

 

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