December 7, 2021

Delaney Sexton
Contributing Editor

Hot Topic Tuesday – Inspector General Finds EIDL Recipients on the Treasury’s Do Not Pay List

“Our review of Treasury’s analysis of processed COVID-19 EIDL and emergency EIDL grants from March to November 2020 revealed that over $3.1 billion in COVID-19 EIDL and $550 million in emergency EIDL grants were distributed to potentially ineligible recipients,” says the SBA Inspector General, Hannibal Ware. “The law further specifies the use of [Do Not Pay] data sources as a control to determine program or award eligibility. SBA did not implement DNP data sources as a control during the period of this analysis,” further reads the OIG’s recent report.

The Office of Inspector General found that more than 7,000 of the 75,180 potentially fraudulent approved EIDL loans were found by an exact taxpayer identification number (TIN) and non-exact name match in the Do Not Pay data sources. Those that were found on the Do Not Pay data sources have a high likelihood of improper payment. In cases where the applicant’s name differed from the name in the data sources but had a matching TIN, there is a strong chance that they are a match. Of the emergency EIDL grants, 2% of the applicants were found in the DNP sources and are likely to have received improper payment.

The OIG provided three recommendations for the Administrator to address:

  1. “Implement prepayment and preaward procedures and use the batch match or continuous monitoring functions available in Treasury’s DNP system to identify potentially ineligible applicants before disbursing COVID-19 EIDL program funds.
  2. Use Treasury’s DNP analysis to systemically flag COVID-19 EIDL and Emergency EIDL grant recipients who were found in Treasury’s DNP system and not previously reported by OIG. Review the applications and determine whether they are deemed ineligible. If the applicant is deemed ineligible, recover any disbursed funds, and flag the application as ineligible.
  3. For all COVID-19 EIDLs and Emergency EIDL grants identified and flagged as potentially ineligible above, include those transactions in SBA’s 2021 improper payments estimation process.”

The SBA has resolved the first two recommendations but has not resolved the third issue because there was only a small percentage of EIDL and EIDL Advances that were identified in the DNP lists. It is crucial that lenders adhere to the OIG’s quality control standards because it will be a special point of review for all SBA lender disbursements.

Source:
OIG Report