Chairman Williams Leads Committee Republicans in a Letter Demanding Answers on the SBA's Decision Not to Collect on Pandemic Loans Worth $100,000 or Less
Washington, October 18, 2023
WASHINGTON, D.C. – Today, Congressman Roger Williams (R-TX), Chairman of the House Committee on Small Business, along with all Republicans of the Committee, wrote to Administrator Isabella Guzman of the Small Business Administration (SBA) regarding the SBA and Biden Administration’s failure to collect on past-due COVID-19 loans. Chairman Williams issued the following statement.
“The COVID-19 pandemic broke the SBA. The agency failed to detect upwards of $200 billion in potential fraud in their lending programs and now has decided to end active collections on loans of $100,000 or less,” said Chairman Williams. “The SBA should be treating these taxpayer-funded loans the same way as any business owner would who is owed a large debt. The SBA should continue pursuing loans of all sizes rather than taking the path of least resistance. This Committee will continue its investigation into this concerning decision and will work to hold the SBA accountable.”
Read the full letter here.
Read excerpts from the letter below:
“The House Committee on Small Business (Committee) is continuing our investigation into the Biden Administration’s decision not to actively pursue collection on loans of $100,000 or less in the Paycheck Protection Program (PPP) and COVID Emergency Injury Disaster Loan (COVID EIDL) program. The Committee maintains that the decision not to pursue active collection on these loans is a waste of taxpayer dollars, an abuse of taxpayers’ trust, and a dereliction of duty by the Biden Administration. Over the course of the Committee’s seven-month investigation, the Small Business Administration (SBA) has failed to provide sufficient evidence to show that this decision was made with adequate analysis to ensure it was in the best interest of the American taxpayer.
“The Committee’s investigation began after the SBA’s Office of Inspector General (OIG) published a report noting the SBA’s decision not to pursue PPP loans $100,000 or less was not justified. During our hearing with the SBA Inspector General (IG) on July 13, 2023, the IG reiterated that he did not agree with this decision and the SBA had not provided a suitable justification for ceasing collection on these loans. The OIG’s most recent report, released on September 29, 2023, examined the SBA’s decision to end active collection on COVID EIDLs $100,000 or less. Unlike the PPP, these loans were never meant to be forgiven, and represent a portfolio valued at $70.9 billion. The OIG reached the same conclusion regarding COVID EIDL as they did with the PPP: the SBA has failed to adequately justify either decision.
“Federal Claims Collection Standards require agencies to pursue all appropriate means of collection and determine based on these efforts that the debt is uncollectable before terminating collection of a claim. This Committee maintains its position that the SBA’s reliance on outcomes of the SBA Express Loan Program collection in its justification not to pursue these loans is improper and does not satisfy the aforementioned standard. The OIG agrees, stating in its report that the relatively small sample of the SBA Express loans used to draw this conclusion, in addition to the fact that the eligibility requirements significantly differ from those of COVID EIDLs, makes the basis of the SBA’s estimate of recoveries unreliable. To date, the Committee has not received any convincing evidence to show how or why the SBA justified the decision not to collect COVID EIDLs of $100,000 or less based on collection results of the Express Loan program.
“Further, the SBA retained an outside consultant in May 2021 to determine whether pursuing a partial sale of delinquent COVID EIDLs would be in the best interest of the taxpayer. The consultant recommended the SBA sell part of the debt through a holistic disposition plan to ensure an exit strategy that would maximize the value of the portfolio. However, the SBA decided not to follow the consultant’s advice and did not provide the OIG with a reasonable explanation for that decision when asked. The Debt Collection Improvement Act specifies that an agency shall sell nontax delinquent debt after terminating collection actions if the Secretary of Treasury determines sale of debt is in the best interest of the United States.11 It is unclear if the SBA has consulted the Department of Treasury (Treasury) on their decision not to sell the portfolio.”
Signatories include Chairman Roger Williams (R-TX), Vice Chairman Blaine Luetkemeyer (R-MO), Rep. Pete Stauber (R-MN), Rep. Dan Meuser (R-PA), Rep. Beth Van Duyne (R-TX), Rep. Maria Salazar (R-FL), Rep. Tracey Mann (R-KS), Rep. Jake Ellzey (R-TX), Rep. Marc Molinaro (R-NY), Rep. Mark Alford (R-MO), Rep. Eli Crane (R-AZ), Rep. Aaron Bean (R-FL), Rep. Wesley Hunt (R-TX), and Rep. Nick LaLota (R-NY).