Lawmakers take action after report shows Biden-era SBA failed to probe 2 million alleged COVID aid fraudsters

The respective chairs of the Small Business Committee in both chambers of Congress, Sen. Joni Ernst of Iowa and Rep. Roger Williams of Texas, both Republicans, are taking action to address the approximately 2 million “likely fraudulent” pandemic aid applications that were recently flagged in a government report. They are unveiling a plan to introduce the SBA Fraud Enforcement Extension Act, aimed at cracking down on those who allegedly broke the law and prevented legitimate U.S. small businesses from receiving essential aid.

The proposed bill, known as the SBA Fraud Enforcement Extension Act, would extend the statute of limitations to 10 years for fraud related to the Shuttered Venue Operators Grant (SVOG) and the Restaurant Revitalization Fund relief programs established in 2020. This legislation builds upon previous efforts by lawmakers to identify potential violators of the Paycheck Protection Program in 2022.

A report from the nonpartisan Government Accountability Office (GAO) revealed that the Small Business Administration (SBA) under the Biden administration signed or guaranteed over $1 trillion in loans to more than 10 million small businesses. While the SBA had implemented a four-step process to combat fraud, the plan faltered when the SBA inspector general was unable to fully investigate two-thirds of the risk referrals due to incomplete or inaccurate information provided by the agency.

Lawmakers, including Ernst and Williams, expressed concern over the lack of action taken by the SBA in response to the GAO’s recommendations. They are determined to hold accountable those who exploited taxpayer dollars meant for struggling small businesses during the COVID-19 pandemic. In states like Iowa and Texas, reports of restaurants missing out on crucial aid while fraudulent applicants received funds have sparked outrage and calls for justice.

The Texas Restaurant Association reported that thousands of restaurants faced closure in 2022, despite federal aid being available. Additionally, reports surfaced of Hollywood celebrities misusing SVOG funds for personal expenses, further highlighting the need for stricter enforcement measures to combat fraud.

Williams emphasized the importance of prosecuting fraudsters who took advantage of government aid programs, stating that every individual who defrauded taxpayers must face consequences. As the fifth anniversary of the first COVID-19 lockdowns approaches, efforts to extend the SBA’s ability to pursue fraudsters are crucial to ensuring accountability and justice.

In response to inquiries about the GAO report, an SBA spokesperson noted that Administrator Kelly Loeffler has taken steps to enhance fraud prevention efforts. The SBA remains committed to cracking down on fraudulent activities within its loan programs and holding pandemic-era fraudsters accountable.

As lawmakers continue to push for stricter measures to combat fraud in pandemic aid programs, the focus remains on ensuring that legitimate small businesses receive the support they need to recover from the economic impact of the pandemic. The SBA’s efforts to prevent fraud and hold wrongdoers accountable are essential in safeguarding taxpayer dollars and supporting the resilience of small businesses across the country.