SBA OIG Identifies Almost $4.6 Billion in Potentially Ineligible PPP Loans on Do Not Pay

February 27, 2024

Delaney Sexton
Contributing Editor

SBA OIG Identifies Almost $4.6 Billion in Potentially Ineligible PPP Loans on Do Not Pay

The SBA Inspector General’s recent report updated SBA’s progress toward addressing their policies and procedures. It is vital that SBA resolves these issues sufficiently to minimize the risk of the government paying out billions of dollars to potentially ineligible businesses and individuals resulting in financial losses and improper payments.

SBA reviewed 25,634 First Draw PPP loans that were potentially ineligible due to being identified in Do Not Pay data sources. These totaled $2.7 billion.

The OIG identified shortcomings in SBA’s review plan because only loans with submitted forgiveness applications where all the funds had been disbursed and used were reviewed. For Round 1 PPP, lenders disbursed 1,799 loans worth over $89 million with known DNP data matches before the eligibility issues were resolved.

The Inspector General found that SBA’s manual loan reviews did not always ensure eligibility. They estimated that SBA forgave 48% of PPP loans with DNP hold codes totaling $1.4 billion without verifying the borrowers’ eligibility.

During Round 2 PPP, the Inspector General identified 59,893 potentially ineligible loans worth about $1.9 billion that were found using DNP data sources.

The OIG recommended that SBA “implement or enhance policies or procedures to ensure compliance with program requirements and federal standards for identifying/preventing improper payments and seek remedy or repayment of ineligible loans.” So far, SBA has resolved almost half of the Inspector General’s recommendations.

OIG Report