In the meantime, it remains to be seen whether Congress will be able to extend or add to the PPP after the House passed a $2.2 trillion relief package along party lines Thursday. House Speaker Nancy Pelosi reportedly met Monday with Treasury Secretary Steven Mnuchin to try to work out a deal that will garner support from the Republican-led Senate. The House-approved measure would include some streamlined forgiveness processes for PPP loans of $150,000 or less, which Mnuchin said on Friday he supports.
“As it relates to the forgiveness part of this, I appreciate for many small businesses, the forgiveness process is a little bit complicated,” Mnuchin said during an interview with Rep. Tom Reed (R-NY) posted on YouTube. “As part of additional legislation, we do support the bipartisan fix to simplify the process for loans that are $150,000 or less but still gives the SBA the ability to audit, which is necessary. Unfortunately, without legislation, there’s only so much we can do.”
Mnuchin said the SBA and Treasury are also working toward “an administrative solution” to make it easier for borrowers of loans of $50,000 or less to apply for forgiveness.
“We’re trying to work on a solution for loans that are $50,000 and less administratively that at least makes it slightly easier, and hopefully we’ll roll that out within the next week,” he told Reed.
Lawmakers and regulators have been working to answer the call from borrowers and lenders to streamline the forgiveness process, but they are also facing pressure to mitigate the risk of losses to taxpayers from fraud.
During a House Subcommittee hearing Oct. 1 on fraud tied to the PPP and the Economic Injury Disaster Loan (EIDL) program, government auditors and lawmakers expressed frustration, saying that while the programs have provided help to small businesses, too little has been done to mitigate fraud.
Hannibal “Mike” Ware, Inspector General of the SBA Office of the Inspector General, noted that since May 5, when the first DOJ charges were brought, more than 57 defendants have been charged related to PPP fraud, and hundreds of investigations are ongoing. "We’re on this, and we’re going to keep on this."
He said that despite working with the SBA to mitigate risk, "There's no doubt a large part [of funding] has gone to ineligible recipients."
William Shear, Director of Financial Markets and Community Investment for the U.S. Government Accountability Office (GAO) agreed. “It’ll be a long time before we know how much fraud there was in the program" of 5.2 million PPP loans and 3.5 million EIDL loans, he said. He said the OIG would like to work with the SBA even now to ensure it sets up a fraud risk framework to prevent further fraud as it proceeds with forgiveness and the rest of the program. "We very much recognize there was a push to get loans out,” Shear testified. “But with the passage of time it becomes more troubling when the fraud framework is not in place to mitigate the risk in place."
