Biden-era SBA reveals flaws in pandemic relief oversight

By jalyn on
 March 26, 2025
A report by the Government Accountability Institute has revealed significant lapses in oversight by the Small Business Administration (SBA) during the disbursement of coronavirus aid funds, sparking calls for improved safeguards and accountability.According to Breitbart, the investigation reveals systemic failures in the oversight of pandemic relief funds, with critics highlighting severe deficiencies in the SBA's approach that could lead to substantial fraud.Sen. Joni Ernst, chair of the Senate Small Business Committee, has voiced strong criticism against the SBA. In her view, the administration failed poorly in its oversight capability, which she described as either stunning incompetence or a deliberate disregard for duty. The Government Accountability Institute (GAO) published a report that critiques the SBA's management of over $1 trillion in pandemic relief funds distributed between 2020 and 2022. Although a substantial amount of funds was supposed to support small businesses during the pandemic, the report highlights ineffective measures in place to combat potential fraudulent activity.

Delays in Fraud Prevention Measures

The report outlines a significant delay in the implementation of antifraud processes, with formal steps only being introduced after more than half of the funds had been distributed. Specifically, the agency implemented a four-step procedure comprising initial screenings, data analytics, human-conducted reviews, and subsequent referrals to the Office of Inspector General. However, for the Economic Injury Disaster Loan (EIDL) program, over $210 billion of the $385 billion allocated was dispersed before these processes began. Similarly, for the Paycheck Protection Program (PPP), $525 billion of its $800 billion allocation went out before these procedures took effect.

This oversight failure has been noted by the GAO, urging the SBA Administrator, Kelly Loeffler, to coordinate with the Office of Inspector General to formulate a comprehensive plan to manage potential fraud cases under the EIDL program effectively. Predictorily, the absence of timely fraud prevention mechanisms left generous room for the abuse of funds, spotlighting a critical weakness in the pandemic-era efforts.

Criticism Highlights SBA's Approach

In a statement, Caitlin O’Dea, representing Administrator Loeffler, expressed the administration's dedication to preventing fraud and securing accountability. O’Dea also mentioned deficiencies in the SBA's approach, contrasting it with the previous administration that had failed to address a significant volume of estimated fraud during the pandemic.

Sen. Ernst has zeroed in on specific instances of fraudulent activities, where funds essentially went to hands they were not intended for. Notable examples include $312 million going to children under the age of eleven. Calls for further investigation have been made against a loosely regulated "first come, first serve" methodology which contributed to fraudulent applications bypassing scrutiny that would have otherwise prevented their approval.

Examples of Noteworthy Fraudulent Claims

Some startling examples of fraudulent applications have been cited, including instances where individuals received approval using nonsensical documentation, such as pictures of dolls as identification. Additionally, the senator illustrated a situation where an individual was wrongly granted a whopping $8 million loan while actual small businesses suffered from neglect or lack of available funds. An ongoing investigation led by Senator Ernst along with Sen. Rand Paul discovered further misuse, showcasing around $5.4 billion in loans attributed to fake Social Security numbers.

As the calls for reform and accountability grow, Sen. Ernst has pledged commitment to exposing and addressing the mishandling of pandemic-related aid under her position in the Senate Small Business Committee and DOGE Caucus. With investigations underway, addressing pandemic-era fraud remains a key focus, highlighting the need for rigorous oversight and timely intervention in support of legitimate small businesses.

The findings by the GAO add further coal to an already fiery debate, urging the need for stringent controls and comprehensive responses to prevent future breaches of lending programs. The events serve as a stern reminder that safeguards and protocol enhancements are needed to shield those most in need from fraudulent activity.

Ultimately, the ongoing response and corrective measures taken by the SBA will be critical in restoring integrity to relief programs designed to assist in times of crisis, alleviating concerns of recurring faults in anticipated times of need.