Almost all PPP loans are forgiven with limited inspections

A barbershop closed in Cleveland in May 2020. Small businesses were hit hard by the coronavirus pandemic and the first round of the government’s multi-billion dollar Wage Protection Program was shut down.

Tony Dejak/AP


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Tony Dejak/AP


A barbershop closed in Cleveland in May 2020. Small businesses were hit hard by the coronavirus pandemic and the first round of the government’s multi-billion dollar Wage Protection Program was shut down.

Tony Dejak/AP

As COVID-19 threatened to shut down businesses back in 2020, the U.S. government began handing out almost $800 billion on loans that may be forgiven Payment Protection Program. The program was designed to help small business employ workers on uncertain days of disease onset.

More than two years later, most of these loans have been converted into government grants, as 91% have been forgiven in whole or in part, according to an NPR review of the data provided. by the Small Business Administration on October 2.

The SBA expects that number to increase to nearly 100% as more loan applications are processed this fall.

Despite complaints Researcher at the University of Texas about 1.4 million PPP loans show signs of fraud, such as suspicious high payments and multiple businesses listed at the same residential address. The SBA disputes these findings, however determined by the inspector general at least 70,000 loans may be fraudulent.

Currently, the SBA is scrutinizing only a small portion of the millions of PPP loans for fraud and foreclosure eligibility. The SBA uses computer models to review all 11.4 million loans, according to Patrick Kelley, a senior official at the agency, but he said auditors manually reviewed only 215,000 loans. , about 2% of the total amount issued.

And of these close reviews, Kelley said that only 21,000 could not be forgiven, which is about 0.2% of all loans issued.

Whose loans are not forgiven?

About 1 million out of 11.4 million PPP loans remain unforgiven. Most of these non-forgiven loans are owned by individuals and independent contractors: sole proprietorships that are strictly on a rolling basis. end of the program. Many service jobs have been severely affected by COVID-19, such as barbers, janitors and Uber drivers.

Many of these businesses that got their loans through financial technology companies, rather than traditional banks, told NPR that it was very difficult to get them forgiven.

Fintechs, as they are known, are businesses that use new technologies to offer financial services.

One fintech, called Kabbage, is facing a class action lawsuit on claims that loan forgiveness applications cannot be processed quickly and efficiently. Last week, Kabbage filed for bankruptcy.

NPR contacted many of these small businesses with unpaid loans and heard all kinds of additional reasons why they are not forgiven, ranging from missed emails or faulty applications to bad advice from accountants.

But the SBA said that some of these PPP borrowers have not applied for forgiveness, because many of them can wait to apply for five years after their loans were issued.

In what Senate committee review in August, Kelley said the SBA had already processed forgiveness decisions for about 97% of loans issued in the program’s first year, 2020. The figure for 2021 loans was behind, at 85%, but Kelley told NPR that he expects more loans. remaining loans are forgiven this fall.

Sierra Lyons contributed reporting to this story.

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