The Small Business Administration failed to adhere to many orders from Congress in carrying out its immense loan plan that is supposed to preserve businesses over the course of COVID-19. That includes not putting forth direction to make underserved societies a top concern, the SBA’s inspector general reported, according to The Wall Street Journal.
The inspector general hones in on the Paycheck Protection Program—a large portion of a $2 trillion assistance bill that in March became statute—and how efficiently the SBA followed the statute’s directives.
The inspector general took note that Congress mandated the agency to provide directives to bestowers about markets that are underserved and in the country. However, the SBA didn’t do that. Consequently, debtors “including rural, minority and women-owned businesses may not have received the loans as intended,” the inspector general reported.
It also learned that the agency put forth standards that mandated that debtors utilize 75% of the capital on salaries to get the entire clemency of their credit, despite the CARES Act Congress passed not requiring any particular quantity be committed for salaries.
Several small businesses opposed this requirement. Owners of beauty salons, business establishments serving food and drink and additional enterprises who have had to shutter say they required the cash more for upkeep, including fees paid for use.
The agency did not talk with WSJ on the inspector general’s verdict. But the inspector general contained the agency’s reply to the report that the SBA was requiring 75% of Paycheck Protection Program credits go toward salaries; the SBA said it did it “in light of the act’s overarching focus on keeping workers paid and employed.”
The inspector general reported the information in a reply to Sens. Chuck Schumer’s (D-N.Y.), Ben Cardin’s (D-Md.) and Sherrod Brown’s (D-Ohio) penned questions concerning the Paycheck Protection Program, which has been in the middle of the United States government’s small-business assistance work. It presents credits to small businesses to pay for salaries and additional upkeep costs for about eight-and-a-half weeks.
Mr. Schumer stated that the inspector general “makes clear that the Trump administration must immediately fix the Paycheck Protection Program to help the truly small businesses that have so far not received the help they need.”
Further, the inspector general discovered that the agency failed to adhere to the CARES Act’s requirements on providing directives on recording program loans and credit postponement.
The inspector general urged many actions the SBA can take to better get its PPP behavior in line with the law. That includes reconsidering the requirement mandating that 75% of the credit go to salaries.