November 2, 2020
Main Street Monday — International SME Economic Relief Programs Riddled with Fraud
As of September, the SBA OIG had received more than 77,000 Hotline complaints of potential fraud within the PPP and EIDL programs and the U.S. Department of Justice had filed 39 PPP fraud cases. These staggering numbers have left many Americans concerned about the effectiveness of the government’s approach to economic recovery. However, the U.S. is not the only country facing fraud and mismanagement when it comes to bailing out small businesses economically impacted by the coronavirus pandemic.
Here is a look at struggles other countries and regions are facing when it comes to aiding small businesses impacted by COVID-19:
- The UK’S National Audit Office has reported that their Bounce Back Loan Scheme has succeeded in quickly supporting small businesses, but at the same time warns that the Government is now facing the potential loss of anywhere between £15 billion and £26 billion through companies not being able to repay the loans and acts of fraud.
- Germany is cracking down on fraud within their COVID-19 small business recovery grant program after receiving reports of fraudsters creating over 104 fake business websites and successfully phishing between 3,500-4,000 data sets in order to apply for funds.
- 34 people have been arrested in Japan on suspicion of fraudulently applying for and receiving interest-free, unsecured government loans designed to help workers get through the coronavirus pandemic.
In addition to these loan programs, numerous others are still in their infancy and have not been able to make a significant impact on retaining small businesses. For example, the European Investment Bank Group has approved a €25 billion pan-European Guarantee Fund to aid small and medium-sized enterprises. However, the EU is still in the process of making the fund operational and recent estimates suggest that it may not be fully implemented until January 1, 2021. Likewise, Brazil announced a government guaranteed loan program to aid in economic recovery last month and has not yet implemented the program.
Click here to see a full list of international responses to COVID-19’s economic impact on small and medium-sized businesses.