Main Street Monday – GAO Criticizes SBA with Restaurant Revitalization Fund

July 25, 2022

Delaney Sexton
Contributing Editor

Main Street Monday – GAO Criticizes SBA with Restaurant Revitalization Fund

They reported on RRF award disbursements:
• Just over 100,000 businesses received funding, 40% of eligible applicants.
• The median Restaurant Revitalization Fund award was around $126,000.
• 72% of applicants reported that their business was owned by women, veterans, or members of socially or economically disadvantaged groups.
• 43% had revenue of $500,000 or less in 2019.

“SBA emphasized pre-award controls to detect fraudulent or ineligible applications but has not assessed their effectiveness. While SBA prevented over 30,000 suspicious applications from receiving awards, GAO identified systemic control weaknesses. For example, SBA considered applications made through external vendors to be low-risk, but over 4,000 recipients who applied through such a channel have been flagged for suspected fraud or ineligibility, including an alleged fraudster who received $8 million. Assessing controls and addressing deficiencies would help SBA better ensure program integrity,” reads a recent report by the Government Accountability Office on the Restaurant Revitalization Fund.

The GAO provided the following 7 recommendations:

  1. Conduct and document an assessment of the RRF pre-award controls and address or reduce any deficiencies.
  2. Assess the design of the RRF’s pre-award controls and how they adversely affected applicants from U.S. territories to avoid this issue in future programs.
  3. Develop and implement policies and procedures for addressing RRF recipients who do not meet annual reporting requirements.
  4. Enhance RRF post-award reporting procedures by adding requirements for recipients to report their operating status.
  5. Develop and implement data analytics across RRF awards as a means to detect potentially fraudulent award recipients.
  6. Develop, document, and implement procedures to use enforcement data on suspected fraud in other SBA programs, such as PPP, to identify potential fraud in RRF recipients.
  7. Develop and implement a plan to respond to potentially fraudulent and ineligible RRF awards in a prompt and consistent manner. This plan should include coordinating with the OIG to align efforts to address fraud.

GAO Report