Inspection of SBA's Implementation of the Paycheck Protection Program

This inspection report presents the results of OIG’s assessment of SBA’s implementation of the PPP, including the timing of implementation, lender participation, guidance provided to lenders and staff, timeliness of loan approval and disbursement, and systems used to process lender loan approvals.

SBA’s initial response to implement the PPP quickly made billions of dollars of capital available to millions of borrowers affected by the COVID-19 pandemic. SBA quickly released loan origination program guidance for most program aspects and approved approximately 3,800 financial institutions for participation in the program. However, SBA’s efforts to hurry capital to businesses were at the expense of controls that could have reduced the likelihood of ineligible or fraudulent business obtaining a PPP loan. As a result, there is limited assurance that loans went to only eligible recipients.

We found aspects of SBA’s implementation of the PPP could prevent Congress and SBA management from having the information needed to determine if program objectives were fully met. We also found SBA’s PPP publicly reported and loan-level data was inaccurate and incomplete, and SBA guidance was not sufficient to ensure PPP lenders prioritized underserved markets during the initial round of funding.

We made six recommendations to improve SBA’s program and reduce the risk of financial loss from PPP loans being made to ineligible or fraudulent borrowers and improve SBA’s ability to obtain information necessary for critical program decisions. SBA fully agreed with 5 of the 6 recommendations but disagreed with recommendation 3. However, management provided an alternative solution that satisfied the intent of the recommendation. Management plans to review the loans identified in the report as potentially ineligible and implement or strengthen internal controls to ensure loans were not made to ineligible or potentially fraudulent borrowers.