Flash Report Small Business Administration's Implementation of the Paycheck Protection Program Requirements

On April 24, 2020, the Office of Inspector General (OIG) initiated its planned review of the Small Business Administration’s (SBA’s) implementation of the Paycheck Protection Program (PPP). Based on this ongoing work, we produced a flash report to meet the information needs of Senators Schumer, Cardin, and Brown. We analyzed key provisions of Section 1102 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law by the President on March 27, 2020, to provide economic relief to our Nation, and SBA’s Interim Final Rules and public guidance intended to further inform stakeholders of SBA’s implementation of the PPP. Section1102, created the PPP under section 7(a) of the Small Business Act, and the PPP provided for $349 billion in fully guaranteed SBA loans, which can be forgiven if used in accordance with the Act.

SBA launched the program on April 3, 2020, and just 14 days later, by April 16, PPP lenders approved more than 1,661,000 loans totaling nearly $342.3 billion. On April 24, 2020, the President signed the Paycheck Protection Program and Health Care Enhancement Act to provide an additional $310 billion to the PPP. SBA initiated this cycle of additional funding on April 27, 2020. As of May 6, PPP lenders approved an additional 2,441,369 loans, totaling about $183.5 billion. The Paycheck Protection Program and Health Care Enhancement Act set aside portions of the additional funding for smaller lenders, but there were no other significant differences regarding requirements for the PPP than in the CARES Act.

The Senators also asked that by May 8, 2020, we provide recommendations on SBA’s current rules, regulations, policies, and procedures to ensure small businesses get the money they need and are treated fairly by PPP lenders.

To conduct our comparative analysis, we reviewed and assessed the regulations for the PPP and for the Paycheck Protection Program and Health Care Enhancement Act, in addition to guidance published in SBA’s Interim Final Rules and FAQs issued as of April 30, 2020. We also assessed the PPP borrower application and additional public documents issued by SBA and the U.S. Department of the Treasury.

We found that SBA’s Interim Final Rules for implementing the PPP and SBA’s FAQs mostly aligned with the Act. We identified the following areas, however, that did not fully align with the Act’s provisions:

• Prioritizing Underserved and Rural Markets
• Loan Proceeds Eligible for Forgiveness
• Guidance on Loan Deferments
• Registration of Loans

We offered some suggestions for SBA to consider to better align PPP requirements with the provisions of the CARES Act.