COVID-19 EIDL Program Recipients on the Department of Treasury's Do Not Pay List

We produced this Management Advisory to notify Small Business Administration (SBA) officials of serious concerns about potential improper payments in SBA’s Coronavirus Disease 2019 (COVID-19) Economic Injury Disaster Loan (EIDL) program.

Our review of Treasury’s analysis of processed COVID-19 EIDL and emergency EIDL grants from March to November 2020 revealed that SBA’s lack of adequate preaward controls during this period of review led to 75,180 COVID-19 EIDLs totaling over $3.1 billion and 117,135 emergency EIDL grants totaling over $550 million being disbursed to potentially ineligible recipients.

Our preliminary review of Treasury’s DNP analytical summaries indicated SBA should reassess controls to ensure only eligible recipients obtained COVID-19 EIDLs and emergency EIDL grants.

A portion of these applications have been identified as potential fraud risks in previous OIG reports.  A significant percentage of COVID-19 EIDLs and emergency EIDL grants that Treasury found in federal data sources had also been identified in earlier OIG audit reports.

SBA’s lack of adequate front-end controls to determine eligibility contributed to the distribution of COVID-19 EIDLs and emergency EIDL grants to potentially ineligible recipients.

SBA should take immediate action to limit improper payments by strengthening existing controls and implementing additional internal controls to address improper payments, especially through the use of the DNP portal.

To prevent potential improper payments, we recommended SBA use the batch match or continuous monitoring functions available in Treasury’s Do Not Pay portal to identify potentially ineligible applicants before disbursing COVID-19 EIDL program funds.