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One of the Small Business Administration’s biggest challenges in the coming year is how it'll service its now massive loan program — and ensure it recovers as much as possible from fraudulent loans.
That’s the determination of the SBA Office of the Inspector General, which serves as an independent watchdog for the agency. It said in its annual report released Oct. 15 that prior to the Covid-19 pandemic, the SBA typically serviced about 263,000 disaster loans totaling about $9.4 billion.
But today, the agency is servicing about 2.5 million disaster loans totaling $283 billion — a more than ninefold increase.
That’s because of the massive number of Covid-19 Economic Injury Disaster Loans the agency made from 2020 through 2022, in which it processed about 4.1 million loans for roughly $390 billion. On top of that, the SBA typically services a disaster loan until it is paid in full or up until default at 180 days, but for Covid EIDL loans, it struck a deal with the Treasury Department to serve even defaulted loans for up to two years.
“This will further stress SBA’s ability to fully and completely service current loans and perform full-spectrum collection efforts on past-due and defaulted loans," the SBA IG said in its report. "SBA’s challenge is to be responsive to recipients of these loans and perform its due diligence to mitigate loss to the taxpayer."
The SBA has taken steps to service such a massive portfolio, according to the report, such as establishing a standalone Covid-19 EIDL servicing center in Fort Worth, Texas, with more than 1,500 employees. Under the Trump administration in 2020, the SBA reduced or eliminated internal controls on its lending in order to expedite loans during the initial Covid-19 crisis. The IG estimates the agency ultimately disbursed about $236 billion in fraudulent Covid EIDL loans.
Ramped-up efforts to address fraud have yielded returns, too, according to the report. That includes $1.1 billion in seized or forfeited assets and over $900 million in restitution orders. In addition, federal agency efforts have resulted in nearly $9 billion in Covid EIDL funds being seized or returned to SBA and $20 billion paid from borrowers prior to the deferment period ending.
The SBA in a statement pointed to the servicing center as being fully staffed and operational, with its workload decreasing over the next several years.
The agency also said that its original portfolio had already shrunk due to early payoffs and charged off loans, dropping from about 3.75 million loans originally to 2.3 million active loans. The agency also requested $524 million in funding to help support Covid EIDL servicing. --->READ MORE HERE
The owner of a Hanford nuclear site subcontractor has agreed to pay the federal government $1.1 million to settle accusations that he and BNL Technical Services defrauded the federal government through its COVID loan program.
A plea agreement with the Eastern Washington District U.S. Attorney’s Office still must go before a federal judge. A hearing is scheduled Tuesday before U.S. Judge Stanley Bastian in the Yakima U.S. Courthouse.
BNL Technical Services, owned and operated by Wilson Pershing Stevenson, received nearly $494,000 in 2020 from a Paycheck Protection Program loan through the Coronavirus Aid, Relief and Economic Security (CARES) Act.
The loan was to retain and maintain payroll for Hanford site workers and also few Department of Veterans Affairs workers during the COVID-19 pandemic.
But the federal government continued to cover the costs of those employees as part of a commitment to keep the federal government contracting workforce in a ready state during the pandemic, according to a court document. BNL overhead costs associated with the workers also were reimbursed with federal government funds.
BNL, which had an office in Richland, hired staff and deployed them to Hanford nuclear reservation and other federal contractors, a service called “staff augmentation.”
Hanford staff for which it received federal loans to pay wages were assigned to work for contractor Washington River Protection Solutions and former contractors Mission Support Alliance and CH2M Hill Plateau Remediation Co., according to court documents.
During the early part of the pandemic the number of workers reporting for environmental cleanup at the Hanford nuclear reservation was limited, with most workers telecommuting or paid with DOE money to wait for more work to resume. --->READ MORE HEREFollow links below to relevant/related stories and resources:
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