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Congressional Republicans are celebrating the Small Business Administration (SBA) collecting on COVID-19 loans after putting pressure on the agency to do so.
Several GOP senators and House members have put the SBA in their sights regarding the pandemic-era loans, with the agency telling lawmakers they are going to collect repayments from defaulted Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loan (EIDL) loans under $100,000.
Sen. Joni Ernst, R-Iowa, who has been a leading voice on the issue, told Fox News Digital that “2024 is already bringing new opportunities for accountability at Biden’s mismanaged SBA!”
HOUSE REPUBLICANS INVESTIGATING SBA OVER ALLEGED MISAPPROPRIATION OF COVID FUND
Senator Joni Ernst, R-Iowa, told Fox News Digital that the SBA is moving to get repayments from defaulted Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loan (EIDL) loans under $100,000. (Getty Images)
“After nearly a year of oversight, the agency finally answered my calls to collect billions of taxpayer dollars in delinquent and fraudulent COVID loans,” Ernst, the ranking member of the Senate Small Business Committee, said.
“I will keep working to ensure the more than $200 billion the agency doled out to fraudsters does not go unpunished or uncollected, and as always, I am committed to making Washington bureaucrats squeal and protecting our hard-earned dollars from waste and abuse,” she said.
House Small Business Committee Chairman Roger Williams told Fox News Digital it “is great to see the Committee’s oversight activities culminate in the SBA reversing course to finally do right by the taxpayers.”
“However, our work is not done,” Williams said. “The Committee will continue looking into why the SBA didn’t send these loans to Treasury earlier, the quantitative analysis to justify this decision, and how the government should appropriately handle the remaining pandemic loan portfolio.”
Rep. Roger Williams, a Republican from Texas, speaks during a House Financial Services Committee hearing investigating the collapse of FTX in Washington, DC, US, on Tuesday, Dec. 13, 2022. (Al Drago/Bloomberg via Getty Images / Getty Images)
Fox News Digital obtained the December letter from SBA Administrator Isabel Casillas Guzman announcing the move by the agency.
The letter was sent to Ernst, Williams and Sen. Jeanne Shaheen, D-N.H., ranking member of the Senate Small Business Committee, as well as House Small Business Committee ranking member Rep. Nydia Velazquez, D-N.Y.
“As we have shared with your teams and committed to in collaboration with the Inspector General, the SBA has performed a more recent analysis of the debt performance of the portfolio as part of our ongoing management and protection of taxpayer funds,” Guzman wrote.
“Our aim is to leverage as many collection steps as are financially beneficial,” she continued.
Guzman said, “I am writing to inform you that with this latest analysis, and using recent, updated data, SBA’s debt collection forecast for the PPP and COVID-19 EIDL portfolio now show a likely positive return to the taxpayer with a referral to the Department of Treasury, the final step of collection.”
Fox News Digital obtained the December letter from SBA Administrator Isabel Casillas Guzman announcing the move by the agency. (Bill O’Leary-Pool/Getty Images / Getty Images)
“SBA will begin referring PPP and COVID EIDL small business borrowers with loans under $100,000 in default to the Treasury for IRS-led and third-party collection activities,” Guzman said. “As you are aware, currently those with loans $100,000 and over in default are already referred to the Treasury.”
“SBA continually monitors all of our loan portfolios, including PPP and COVID EIDL, through regular reporting and sophisticated financial modeling,” she continued. “This work is especially critical for PPP and COVID EIDL because both programs were the first of their kind.”
“Given the unique nature of these programs, SBA took careful consideration to find the best course of action to appropriately manage limited taxpayer resources while supporting the small businesses who fell on difficult times during the pandemic,” Guzman added.
Guzman wrote that the “SBA fully exhausts all collection tools at its disposal including direct customer outreach, collateral and personal guarantees, credit reporting, and CAIVRS/ Treasury Do Not Pay lists, among others” and that in “the spring of 2022, SBA analyzed the cost effectiveness of the final step of collection, which is Treasury referrals, on loans under $100,000 and found the activities would cost taxpayers more to collect than the anticipated amount recovered due to the unique statutory components of these COVID programs.”
“Accordingly, I executed my authority under section 3711 of the Debt Collection Improvement Act of 1996,” Guzman wrote.
“Nothing about that 2022 process on $100,000 and under loans changed SBA’s fundamental position that every borrower who takes a loan from SBA should pay it back or comply with the requirements for forgiveness, in the case of PPP.”
“That is why SBA has always continued to collect on all loans and communicate the consequences from nonpayment,” she continued.
“Additionally, please note that the above discussion does not apply to fraudulent activity. Please be reminded that all identified fraudulent and likely fraudulent loans are referred to the Office of the Inspector General for appropriate collection through law enforcement following every legally permissible step to collect. All other loans without indicia of fraud follow the steps outlined in the attachment How SBA Collects, which we shared with your offices earlier this year.”
The SBA said it would be collecting on PPP and EIDL loans under $100,000, reversing its earlier policy. In 2022, the agency enacted a policy to not collect some loans under $100,000, citing the cost of referring the loans to the Treasury Department for collection.
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The SBA said last month that it estimated $30 billion in unpaid PPP and EIDL loans that are up to $100,000, and that the potential loss to the programs would be nearly 2.5 percent of their total portfolios.
An SBA spokesperson told Fox News Digital that after “an updated December 2023 data analysis determined that referring COVID EIDL and PPP loans less than $100,000 to IRS and Treasury will be cost effective for the government, the Small Business Administration (SBA) took swift action to incorporate this into our collection process.”
“There have always been repercussions for nonpayment, including reporting to credit bureaus and ineligibility for other federal programs, and the SBA will continue to pursue every legal, cost-effective method to help small business borrowers come into compliance by either securing forgiveness for or repaying their pandemic loans as required by law,” the spokesperson added.
