WASHINGTON: The U.S. government will introduce new "robust safeguards" to the third round of the country's main small business pandemic aid program after fraudsters and ineligible companies claimed cash last year, administration officials said on Friday.
The Small Business Administration (SBA) will kick off the third round of the Paycheck Protection Program (PPP) on Monday, opening initially to community financial institutions and all lenders shortly thereafter, the officials said during a media briefing.
In contrast to the program's previous two rounds during which loan applications were automatically approved upon submission, the SBA will vet the initial information, slightly slowing approvals. That process will involve running automated identity and data verification checks overnight, the officials said.
The new safeguards were first reported by Reuters earlier on Friday, citing two sources familiar with the process.
The PPP, created by Congress to help small businesses hurt by coronavirus pandemic lockdowns keep staff on payrolls, enabled participating lenders to dish out US$525 billion worth of loans during two rounds last year.
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 with stealing more than US$250 million from the program. The sources said the SBA will be more vigilant in approving loan applications this time.
“They are not going to let everything through,” one source 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 and Jonathan Oatis)