By Koh Gui Qing and Michelle Price
WASHINGTON (Reuters) – The U.S. Small Business Administration (SBA) will introduce new due diligence checks during the third round of the country’s main small business pandemic aid program after fraudsters and ineligible companies claimed cash last year, two sources familiar with the matter said.
The agency will no longer automatically approve Paycheck Protection Program (PPP) loans and will vet initial submissions, the people said. The process changes, though good for the taxpayer, could potentially slow the pace of approvals, one of the people said.
Created by Congress to help small businesses hurt by pandemic lockdowns keep staff on the payroll, the PPP saw participating lenders dish out $525 billion worth of loans during two rounds last year. The third round is expected to start in coming days, according to the two sources and media reports.
Government watchdogs and congressional investigators have warned that the program has attracted fraudsters, while many large and listed companies, as well as blacklisted companies, gamed the program’s rules to take cash.
The Department of Justice, working with other agencies, has charged more than 80 individuals for stealing more than $250 million from the program. The sources said the SBA will be more vigilant in approving loan applications this time round.
“They are not going to let everything through,” one said.
A senior SBA official declined to comment on the process changes but said “lessons learned” from the previous rounds were being implemented.
(Reporting by Michelle Price; Editing by Chizu Nomiyama, Kirsten Donovan)
