The SBA has played an outsized role in assisting the American economy recover from the COVID-19 pandemic. While the agency has had serious deficiencies in internal controls, program fraud, and information technology for years, the pandemic has only exacerbated these concerns. Today, with $1.2 trillion in assistance flowing through the SBA to small businesses, the SBA must maintain the integrity of these relief programs and safeguard American taxpayer dollars. Unfortunately, recent reports from the SBA Office of Inspector General (OIG) and U.S. Government Accountability Office (GAO) continue to identify programmatic challenges within the SBA’s pandemic relief programs. The OIG has gone so far as to identify “COVID-19 stimulus lending [as] the greatest overall challenge facing SBA.”
In response to the pandemic, numerous emergency programs were quickly stood up to provide immediate relief, stabilize small businesses, and support the American economy. While speed was essential in the early days of the pandemic, over two years since these programs were created, the SBA has yet to fully implement the necessary steps to adequately safeguard taxpayer funds. In March of 2021, one year after the initial relief programs were implemented, the SBA OIG identified vulnerabilities within the PPP which allowed for duplicate loans to be made to the same borrowers. In April of 2021, the OIG identified “serious concerns with the control environment and the tracking of performance results in the Shuttered Venue Operations Grant (SVOG) program” necessitating immediate action to reduce the risk of fraud in this then new program. In May of 2021, the OIG notified the SBA of significant issues with “its handling of complaints of identity theft in the Coronavirus Disease 2019 (COVID 19) Economic Injury Disaster Loan (EIDL) program.”
Similarly, in March of this year, a GAO official testified before the Committee regarding the SBA’s failure to heed the GAO’s yearlong warning of the need to implement the best practices for fraud and risk management. Included in that yearlong warning was the further need for the SBA to name a lead entity to implement GAO fraud risk management best practices.
It wasn’t until April of this year, over two years since these relief programs were initiated and over a year since GAO placed the SBA on notice of the need for reforms, that the SBA finally appears to be taking steps to adequately address potential fraud. On April 1, 2022, the SBA announced the appointment of a SBA Special Counsel for Enterprise Risk, the creation of a SBA Fraud Risk Management Board, and further coordination with DOJ’s Chief Pandemic Prosecutor. Throughout this Congress, Republican members have repeatedly urged the SBA Administrator to strengthen agency controls, increase transparency, and take a proactive approach to preventing fraud.
-Eliminate fraud and duplicative programs to protect taxpayer dollars
-Ensure the SBA takes prompt action on OIG and GAO recommendations
-Increase the SBA testimony and reporting requirements to ensure that Congress can conduct proper oversight
IMPROVE the SBA Act, Title I — Small Business Administration Oversight
This section requires the SBA Administrator to testify annually within 30 days of the President’s Fiscal Year budget request. Additionally, this section holds SBA management accountable for all outstanding GAO and OIG recommendations by requiring the SBA to report to Congress on all at the end of each Fiscal Year.
IMPROVE the SBA Act, Title V — Small Business Administration Duplication
This section ensures that the SBA is maintaining its core mission and prohibits the SBA from beginning new pilot programs until all OIG recommendations are closed. Additionally, this section requires the SBA to only utilize existing SBA programs to deliver counseling services, as these programs are already set up and serving small businesses. This section also eliminates and prohibits the Community Navigator Pilot Program and the SBA programs that duplicate private sector resources, such as accelerators and incubators.
IMPROVE the SBA Act, Title VIII — Inspector General of the Small Business Administration
This section requires the SBA to take action on OIG recommendations in a timely manner by requiring the SBA management to make a decision on each issued recommendation within 10 days and requiring the SBA to close out all recommendations within 90 days. Further, it establishes an accelerated timeline for emergency authorization rulemaking recommendations to be made within 45 days.
ADDITIONAL LEGISLATION AND ENGAGEMENT:
Bringing Back Main Street Act of 2021 | August 20, 2021
H.R. 5070 requires the GAO to study and report on the amount of small business assistance that has been received by foreign-based small businesses during the period beginning on March 1, 2020 and ending on the bill's date of enactment. Introduced by Rep. Beth Van Duyne (R-TX) | Original House Cosponsors: Rep. Byron Donalds (R-FL)
Restaurant Recovery Fairness Act of 2021 | May 25, 2021
H.R. 3551 increases oversight requirements within the Restaurant Revitalization Fund program. Introduced by Rep. Beth Van Duyne (R-TX) | Original House Cosponsors: Blaine Luetkemeyer (R-MO); Jim Hagedorn (R-MN); Dan Meuser (R-PA); Andrew Garbarino (R-NY); Roger Williams (R-TX); Rep. Byron Donalds (R-FL); Reps. Dean Phillips (D-MN)
Letter to SBA Administrator Guzman Concerning Restaurant Revitalization Fund Portal Closures | May 20, 2021
Small Business Committee Republican Members sent a letter to SBA Administrator Guzman expressing concerns about the closure of the Restaurant Revitalization Fund program. Signees: Rep. Blaine Luetkemeyer (R-MO); Roger Williams (R-TX); Jim Hagedorn (R-MN); Pete Stauber (R-MN); Dan Meuser (R-PA); Claudia Tenney (R-NY); Andrew Garbarino (R-NY); Young Kim (R-CA); Beth Van Duyne (R-TX); Byron Donalds (R-FL); Maria Salazar (R-FL); Scott Fitzgerald (R-WI)
Letter to the Secretary of the Treasury Yellen and SBA Administrator Guzman Requesting Information Relating to the Number of Planned Parenthood Organizations that Received PPP Loans | April 16, 2021
House Committee on Small Business Ranking Member Blaine Luetkemeyer (R-MO) and Rep. Byron Donalds sent a letter to Secretary of the Treasury Yellen and SBA Administrator Guzman inquiring into the number of Planned Parenthood groups who received PPP loans. Signees: Reps. Blaine Luetkemeyer (R-MO); Byron Donalds (R-FL)