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91% of PPP Loans Forgiven Almost Entirely Without Being Carefully Examined

Iesha October 13, 2022 News Leave a comment

Since the Covid-19 pandemic, the government has issued nearly $800 billion in PPP loans.

According to an NPR data analysis on Oct 2, 91% of these loans have been entirely or partially forgiven, turning several into government grants.

As more requests for forgiveness are completed this fall, the SBA anticipates increasing to about 100%.

Researchers at The University of Texas suggest that around 1.4 million PPP loans present red flags of potential fraud, such as inflated payrolls and several enterprises registered at the same address. However, the SBA contests these findings. The organization’s inspector general has calculated that at least 70,000 loans may have been fraudulent.

A small fraction of the millions of PPP loans is currently being carefully examined by the SBA for fraud and eligibility for forgiveness. Patrick Kelley, a senior official with the SBA, claims that the agency uses computer models to explore all 11.4 million loans. Still, he claims that just 215,000 loans, or approximately 2% of the total amount granted, have been manually examined.

Kelley claims that only 21,000 of these in-depth, practical reviews—or roughly 0.2% of all loans issued—were rejected forgiveness.

One million of the 11.4 million PPP loans remain unforgiven, held mainly by sole proprietors and independent contractors targeted explicitly in a later round.

According to Kelley, who testified in front of a Senate committee in August, approximately 97% of the loans granted in the program’s initial year, 2020, have already had their debt forgiveness decisions processed. 85% of the loans from 2021 were forgiven, which was less than expected, but Kelley told NPR that he anticipates that this fall will see the majority of the remaining loans forgiven.