The Small Business Administration’s Implementation of Recommended Controls and the Economic Aid Act

SBA implemented or initiated action on all the OIG recommendations to strengthen internal controls related to the Paycheck Protection Program (PPP). The Economic Aid Act continued assistance under the PPP for small businesses financially affected by the ongoing coronavirus pandemic. We found SBA implemented the PPP in accordance with the Economic Aid Act with two exceptions. SBA did not 1) require an assessment of affiliation for faith-based organizations which contradicts its internal control procedures and 2) issue guidance regarding farm credit system institutions to ensure requirements were met.

We recommend SBA assess affiliation for faith-based organizations to ensure only eligible faith-based organizations receive the applicable PPP loans. We are not making any recommendations regarding the farm credit system institution requirements and the $1 billion set aside because the PPP ended on May 31, 2021.

SBA disagreed with the recommendation, stating it committed to not assessing or requiring lenders to assess the reasonableness of the faith-based organization’s determination, which they believe met the intent of Congress. This recommendation is considered resolved and closed upon issuance of this report based on SBA’s final decision not to assess the reasonableness of faith-based determinations and its revised updated affiliation worksheet.