U.S. small business program handed out virus aid to many borrowers twice

- Advertisement -
- Advertisement -
- Advertisement -
- Advertisement -

A technical snafu in a U.S. government system caused many small businesses to receive loans twice or more under a federal aid program to help businesses hurt by the COVID-19 pandemic, nearly a dozen people with knowledge of the matter said.

The money mistakenly handed out could amount to hundreds of millions of dollars that the government and lenders – which made the loans – have been trying to identify and recover in recent weeks, one of the people briefed on the matter said.

The technical issue and scale of the resulting duplicate deposits made under the Small Business Administration’s $660 billion Paycheck Protection Program (PPP) have not been previously reported. They are the latest issue to emerge with the massive program, which was designed to keep businesses hurt by the novel coronavirus afloat and their workers employed.

The error was caused by a blind spot in the SBA’s loan processing system which failed to see when some borrowers submitted applications multiple times typically with several different lenders, three of the sources said.

Information provided by the sources, which include industry executives and borrowers, as well as Reddit posts, suggest at least 1,020 duplicate deposits were issued. While that is a tiny fraction of funds disbursed under the huge program, it could amount to roughly $116 million dollars based on average loan sizes.

A spokesman for the SBA declined to comment, while a spokesman for the Treasury, which jointly administers the program, did not respond to a request for comment. Launched in April, the PPP allows small businesses hurt by the pandemic to apply with a bank for a forgivable government-backed loan. The SBA has approved roughly 4.48 million loans averaging $114,000 in size for a total of $510 billion as of May 30.

Under the program, lenders issue the loan and are later reimbursed by the SBA. The government has said it will only guarantee one loan per borrower, which means lenders, rather than the taxpayer, are likely to be on the hook for the error.

This article was originally posted on finance.yahoo.com/news/.
Home of Science
Follow me

Latest posts by Home of Science (see all)
- Advertisement -

Discover

Sponsor

Latest

The Hottest Shows of 2020

So it's time to start thinking about who will be the next hot shows of 2020, because the "Hottest Shows of 2020" are back...

What You Should Know About Fashion Jewelry

It's true that most women have an innate tendency to be fickle in their taste when it comes to fashion. They like new trends...

Morgan Stanley’s strategists are bullish on markets — but here’s their big worry

Though no meme has immediately emerged — unlike the now-infamous Jim Cramer television shot simultaneously showing a huge jump in stocks and a historic spike...

The Hot Shows of 2020

Can you guess what the hottest shows of 2020 are? The answer may surprise you, especially since you didn't think that there would be...

Jobless claims might top 5 million for third straight week, push unemployment to 15%

Some 5 million Americans likely applied for jobless benefits for the third week in a row in mid-April as the coronavirus outbreak took an...
Home of Science
Follow me
Latest posts by Home of Science (see all)