The Paycheck Program Paid Some Businesses Multiple Times

SK Ashby
Written by SK Ashby

The Paycheck Protection Program overseen by the Small Business Administration has not exactly been managed well, but you know how these things typically go under the Trump regime: things are usually worse than we already know.

Financial sources and those who received multiple piles of cash who spoke to Reuters say the program was not designed to track if a company applied for funds with multiple banks and that means some businesses received funds several times over.

WASHINGTON (Reuters) - A technical snafu in a U.S. government system caused many small businesses to receive loans twice or more under a federal aid program to help businesses hurt by the COVID-19 pandemic, nearly a dozen people with knowledge of the matter said.

The money mistakenly handed out could amount to hundreds of millions of dollars that the government and lenders - which made the loans - have been trying to identify and recover in recent weeks, one of the people briefed on the matter said. [...]

The error was caused by a blind spot in the SBA’s loan processing system which failed to see when some borrowers submitted applications multiple times typically with several different lenders, three of the sources said.

Reuters reports that at least 1,000 businesses received multiple payouts. That is a small fraction of the total number of businesses that applied for loans, but it's also probably not a final count.

It immediately occurred to me that small businesses with legitimate needs may have been unable to get approved for loans, or they weren't able to secure a loan before funds ran out, because other businesses received multiple payouts.

There are probably at least some scam artists who did this intentionally, but most businesses are likely concerned about the legal implications if they don't return the money.

The Paycheck Protection Program has to go on the list of all-time bad examples for how to respond to an economic downturn, right? We don't even know how many jobs the program supposedly saved because there's no mechanism for tracking that. We probably won't know, if we ever do, until after the fact when businesses have to repay the money if they can't account for how they spent it. That may not happen until next year as the next stimulus package passed by Congress is expected to extend the deadline for repaying the loans until the end of the current year.