EIDL funds authorized for ineligible grownup leisure and playing companies – Motion Information Jax
WASHINGTON, DC – A watchdog report calls for improvements to one of the government’s pandemic relief programs designed to help small businesses after results showed millions of dollars were approved for potentially ineligible businesses.
The US Government Accountability Office (GAO) report states that the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) program is making approximately 5,000 advances to ineligible companies in industries such as adult entertainment, casino gambling and marijuana – Retail grants as of July 2020 that totaled approximately $ 26 million.
“We have observed companies involved in adult entertainment that are legally prohibited from funding under this program,” said Bill Shear, a director on GAO’s financial markets and community investment team.
The report also states that by September 2020, the SBA had approved at least 3,000 loans through EIDL to ineligible companies such as real estate developers and multi-level marketers that totaled around $ 156 million.
It also pointed to “strong indicators of fraud, such as loans going into potentially fraudulent accounts; Loans to applicants with the same Internet Protocol address, email address, bank details or postal address. “
Shear said the total number of potentially ineligible or fraudulent applications approved is still unclear as the review process is still ongoing.
“It will likely be a long time before we really know how many of those who received these loans were actually ineligible and how many were involved in fraud,” Shear said.
GAO said the SBA made some changes to address the issues, including measures to improve loan officers’ ability to withhold funding from applicants suspected of fraud.
However, it is said that the SBA failed to implement other GAO recommendations, including one calling on the SBA to “conduct data analysis across the EIDL portfolio to identify potentially unauthorized and fraudulent uses.”
In response to the findings, the SBA said, “The SBA reported to GAO that the agency is in the process of developing analytics to apply certain fraud indicators to all application data. SBA is also working on an enterprise approach to implement a comprehensive oversight plan for COVID EIDLs and ensure that a fraud risk assessment is completed and that fraud risks are continuously monitored. “
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