March 24, 2021

Caity Roach
Editor

C-Suite Wednesday – Errors in the PPP Processing System Result in Over 40,000 Duplicate Loans

According to a recent SBA OIG report, bulk loan submissions and missing E-Tran controls resulted in the issuance of over 40,000 duplicate PPP loans. With the help of lenders across the country, the SBA says it has been able to recover 95% of the duplicate loans and prevented an additional 685,529 from being issued. However, the SBA OIG has not been able to validate the SBA’s resolved loan numbers.

Data provided to the SBA OIG indicates that most of the duplicate loans were caused by an error in the E-Tran processing system. The error allowed borrowers with the same taxpayer identification number to receive multiple PPP loan approvals if they used their social security number on one application and their employer identification number on another. Although the majority of borrowers who received a duplicate PPP loan as a result of this error returned the funds, some borrowers fraudulently took advantage of the error. In total, the SBA believes 34,832 duplicate loans were issued before the E-Tran error was resolved.

The second-largest duplicate loan error resulted from the bulk-loan processing method for PPP loans. For a 14 hour period in May 2020, the script which compared loans included in a bulk loan processing request to loans already processed stopped working. As a result, duplicate loan requests were ignored and 5,377 duplicate loans got approved. 

To recover the outstanding duplicate loans and prevent future approval of duplicate loans, the SBA OIG recommends that the SBA:

  • Review identified potential duplicate disbursements for eligibility and take action to recover any improper payments;

  • Review controls related to all PPP loan reviews to ensure that duplicate loans are not forgiven and not subject to an SBA guaranty, as appropriate;

  • Strengthen E-Tran controls for future PPP-type programs to ensure the controls align with program requirements and are active at all times; and

  • Strengthen controls and guidance for lenders to ensure lenders meet program requirements for future PPP type programs.

The SBA fully agrees with the OIG’s recommendations. 

Click here to read the full OIG Flash Report.