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PPP Reopened Nine Days Before the People Running It Left

At 9 a.m. Eastern on January 11, 2021, the Small Business Administration reopened the Paycheck Protection Program portal with up to $284 billion to lend by March 31.12 Nine days later the SBA administrator and the Treasury secretary who had announced the round were gone, and the administrator who would answer for it was confirmed 64 days after the portal opened.34

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In those 64 days an acting administrator signed the rule that let sole proprietors size loans on gross income, and Congress added a $28.6 billion restaurant fund. Three weeks after the new administrator arrived, SBA's Inspector General found that the $16.25 billion venue-grant program's office had one designated official. Congress had restarted PPP and created the venue grants on deadlines that ran through a change of administration. The gross-income rule and the venue-grant launch were both handled by leaders new to their posts: an acting administrator signed the rule six weeks after taking over, and the venue portal opened in the new administrator's fourth week.

December 2020: a new round on an old machine

On December 27, 2020, Congress enacted the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act. It restarted PPP with up to $284 billion through March 31, 2021, and created the Shuttered Venue Operators Grant program with $15 billion.15 The inauguration was 24 days away.

The PPP machine was the one built in April 2020. The first interim final rule set its terms: a 100 percent SBA guarantee, no collateral, no personal guarantees, no "credit elsewhere" test, and lenders "permitted to rely on certifications of the borrower" to decide eligibility.6 On January 8, 2021, Treasury Secretary Steven Mnuchin put the result at "5.2 million loans worth $525 billion."1

SBA's disaster-loan office had been stretched too. SBA's transition briefing for the incoming Biden administration said the Office of Disaster Assistance, in a typical year, "approves over 20,000 loans a year totaling about $1 billion." By October 7, 2020, it had approved 3.6 million COVID-19 Economic Injury Disaster Loans totaling more than $194 billion.7

The same briefing listed PPP and EIDL under "Ongoing COVID-19 Response" and named the people who ran the lending side.7 William Manger, SBA's chief of staff and Associate Administrator for Capital Access, managed "a portfolio of over $835 billion in direct and guaranteed loans, nine operation centers, and 560 employees." One of his deputies, Bill Briggs, "coordinates communications, policy, operations, and Agency implementation efforts for the Paycheck Protection Program" and was SBA's headquarters liaison to financial institutions on EIDL. The 2020 Plum Book, the House Oversight Committee's list of federal policy posts as of June 30, 2020, shows both in non-career appointments: Manger in the Senior Executive Service, Briggs under Schedule C.8

January: the outgoing team opens the round

SBA issued the new round's rules on January 6.9 Two days later SBA and Treasury announced the schedule. Community financial institutions would make First Draw loans on Monday, January 11, and Second Draw loans on Wednesday, January 13. "The PPP will open to all participating lenders shortly thereafter." Mnuchin added: "We are committed to implementing this round of PPP quickly."1

The portal opened on time. Those lenders had been about 10 percent of PPP lenders in 2020, and at least $15 billion was set aside for them. SBA's release promised to "continue to provide updates on systems operations during the week of Jan. 11, 2021."2

The same day, SBA's Inspector General sent Administrator Jovita Carranza a management alert. Treasury's Do Not Pay Business Center had matched first-round PPP data against its records, and OIG's review "showed approximately $3.6 billion in PPP loans to potentially ineligible recipients." The alert said: "This issue requires immediate attention and action." SBA had already put hold flags on the matched loans.10

The new president named acting leaders on January 20: Tami Perriello at SBA and Andy Baukol at Treasury.3 Janet Yellen was sworn in as Treasury secretary on January 26.11 SBA's nominee, Isabella Casillas Guzman, was still waiting for the Senate.

February and March: the rules change with the round half-run

On February 22, the White House announced five changes to a program that had been open for six weeks.12 Starting Wednesday, February 24, only businesses with fewer than 20 employees could apply for 14 days. Sole proprietors would get a new loan formula and a $1 billion set-aside for those without employees in low- and moderate-income areas. The fact sheet also said the administration would remove bars for non-fraud felony convictions and federal student-loan delinquency, and that SBA would clarify that ITIN holders could apply. In May 2020, SBA's Inspector General had reported that SBA did not tell lenders to prioritize underserved and rural markets, as the CARES Act called for.13

The fact sheet said: "Unlike the previous round of the PPP, loan guaranty approval is now contingent on passing SBA fraud checks, Treasury's Do Not Pay database, and public records."12 GAO dates the start of SBA's automated screening of First and Second Draw loans to January 2021, the month the administrations changed; GAO had recommended the step in June 2020.14 SBA's 2023 integrity report listed "the initiation of SBA pre-approval screening for PPP" among its actions "under the Biden-Harris Administration."15 SBA's Do Not Pay hold codes for PPP took effect on February 10. The Inspector General later reported that SBA obtained Do Not Pay's death-record data in February 2021 and was still working with Treasury on access to the other data sets.16

The formula change came as an interim final rule effective March 4 and published March 8, signed "Tami Perriello, Acting Administrator."17 It let sole proprietors size loans on gross income instead of net profit. The rule named its own cost: "the use of gross income by Schedule C filers may, in some cases, increase the risk of waste, fraud, or abuse, because it will substantially increase the maximum loan amount for relevant applicants." Its safeguard was a possible SBA review for borrowers who reported more than $150,000 in gross income.17

SBA implemented that change and the others on March 5. On March 11 its fact sheet reported that, as of March 7, more than 400,000 businesses with fewer than 20 employees had been served during the exclusive window, with nearly 200,000 first-time borrowers. It added: "Nearly 30,000 small businesses had flags removed due to delinquent student loan debt."18 The fact sheet quoted Patrick Kelley as Associate Administrator for Capital Access, Manger's old job.

The Inspector General checked the five changes after the round closed. SBA implemented four. For the fifth, "SBA could not provide sufficient evidence that it established the $1 billion set aside." OIG made no recommendation "because the PPP ended on May 31, 2021."16

On March 11 the American Rescue Plan Act became law. It created the $28.6 billion Restaurant Revitalization Fund and added $1.25 billion to venue grants, for $16.25 billion.195 Guzman was confirmed on March 16 and sworn in the next day, 14 days before PPP's deadline.420 On March 30 President Biden signed the PPP Extension Act, moving the deadline to May 31. "Nearly 90,000 business owners are still in line," he said, "and there's money left."2122

April: the venue grants meet their staffing

The Inspector General's management alert to Guzman arrived on April 7, the day before the venue-grant portal was due to open. The program had $16.25 billion. OIG described its office this way:

"Currently, the program office has one designated official and its staff are on temporary detail. At this time, SBA has not formalized a plan for staffing this office relative to the volume of applications expected."5

OIG also found that the audit plan capped audits of low-risk recipients at 10, although program officials expected most recipients to be low-risk. That plan, OIG wrote, "exposes billions of dollars to potential misuse of funds because the bulk of grant funds will not be subject to a reasonable degree of scrutiny."5

The portal opened on April 8 and shut "only hours after it opened," before any application "had been successfully submitted."23 SBA announced a Saturday relaunch, then moved it to noon on Monday, April 26, "after receiving negative feedback to a weekend relaunch." The reversal came less than 24 hours after the Saturday announcement.23 April 26 was 120 days after Congress created the program. SBA received 7,884 applications in the first 24 hours.24

Treasury was moving to a larger job. On April 14 it created an Office of Recovery Programs, which Treasury said would run nearly $420 billion of American Rescue Plan programs as well as older relief funds.25 On May 17 Treasury's Inspector General sent lessons from the Coronavirus Relief Fund to Jacob Leibenluft, Treasury's Chief Recovery Officer, for use in the Rescue Plan programs.26

May: PPP runs dry and the courts rule on the restaurant priority

SBA began accepting restaurant applications on May 3 and received more than 80,000 on the first day.19 The Rescue Plan required that for the first 21 days, businesses owned and controlled by women, veterans, or socially and economically disadvantaged individuals receive priority.19

PPP's general fund ran out on May 4. After that, only applications processed by community financial institutions could go forward.22

On May 18 a federal judge in Texas found a restaurant owner likely to succeed on his claim that the fund's race- and sex-based preferences violated equal protection, and ordered SBA to consider his application as of the day he sued.27 On May 27 the Sixth Circuit took up "whether the government can allocate limited coronavirus relief funds based on the race and sex of the applicants" and answered: "We hold that it cannot."28 GAO counted three court rulings against SBA. Because of the litigation, SBA did not fund 2,964 priority-period applicants it had approved, and the money went to businesses that had applied before them.19

SBA made its first venue grant on May 26, a month after the portal reopened.24 PPP closed on May 31.22

June and after: speed bought back with controls

The venue program had received 14,214 applications seeking $11.5 billion by June 14 and had awarded 411 grants totaling $304.2 million. Between the April 26 reopening and June 9, staff completed 90 reviews.24 On June 15, 55 senators wrote to Guzman that SBA's "insistence on strict compliance with competitive grant rules created unnecessary funding delays." A letter from 211 House members followed the next day.24

That month SBA ran what it called a "program refresh." According to the Inspector General, reviewers had a benchmark of four hours per application and approvers 30 minutes. Reviewers were told to presume an applicant's statements true "unless a clear indication of fraud existed." Tax-transcript checks were dropped for grants under $500,000, and validation of Do Not Pay hits was limited to conclusive matches. After the changes took effect on June 11, staff reviewed 14,592 applications by July 26.24 In two samples chosen for risk, OIG found 47 of 207 awards, about $22.9 million, went to ineligible entities. SBA management disagreed with the finding.24

The payments changed too. "Even after determining multiple disbursements would better protect grant funds from fraud or misuse, SBA switched to a riskier single advance payment for all grantees," OIG wrote. Program officials had planned to have two officials sign each award. They "determined they did not have enough resources and issued awards without the signatures," and OIG found no assurance that the 11,974 awards worth $9.7 billion made by September 20, 2021, were authorized commitments.29

The restaurant fund closed with more than 278,000 eligible applications requesting over $72.2 billion. About 101,000 applicants were approved, according to SBA.30

In June 2023 SBA credited the programs "designed and launched in 2021" with "dramatically lower fraud rates": 0.33 percent for venue grants and 0.75 percent for restaurants. It said it had blocked 21.3 million applications, "representing $511 billion of funds retained," and that 86 percent of the fraud it estimated in its four major programs originated in the first nine months of the pandemic.15 Its Inspector General reported in July 2025 that as of October 2024, program officials had identified $544 million in potential improper venue-grant payments. SBA had sent one demand letter, in January 2024, and then paused.31

What was approved before the checks

GAO found that for PPP "over $525 billion of an eventual $800 billion (or about 66 percent) had already been approved" before SBA's fraud detect-and-refer process was in place.14 On January 8, Mnuchin had put the first round at "5.2 million loans worth $525 billion."1

Notes

  1. SBA and Treasury Announce PPP Re-Opening; Issue New Guidance, SBA press release, January 8, 2021. ↩1 ↩2 ↩3 ↩4 ↩5
  2. SBA Re-Opens PPP to Community Financial Institutions First, SBA press release, January 11, 2021. ↩1 ↩2
  3. As President Biden Awaits Cabinet Confirmation, White House Announces Interim Leaders, NPR, January 20, 2021 (the White House list of acting agency heads). ↩1 ↩2
  4. Isabella Casillas Guzman Confirmed as 27th SBA Administrator, SBA press release, published March 19, 2021. ↩1 ↩2
  5. Management Alert: Serious Concerns About SBA's Control Environment and the Tracking of Performance Results in the Shuttered Venue Operators Grant Program, SBA OIG Report 21-13, April 7, 2021, pp. 1–5. ↩1 ↩2 ↩3 ↩4
  6. Business Loan Program Temporary Changes; Paycheck Protection Program, 85 FR 20811, SBA interim final rule, April 15, 2020. ↩
  7. Transition Briefing for the Incoming Biden Administration, U.S. Small Business Administration, table of contents, Office of Disaster Assistance section, and leadership bios (updated November 24, 2020). ↩1 ↩2
  8. United States Government Policy and Supporting Positions (Plum Book), 2020, House Committee on Oversight and Reform, data as of June 30, 2020; Small Business Administration, pp. 192–193 (NA = Noncareer Appointment, SC = Schedule C Excepted Appointment, legend p. v). ↩
  9. Paycheck Protection Program as Amended by Economic Aid Act, SBA interim final rule, January 6, 2021. ↩
  10. Paycheck Protection Program Loan Recipients on the Department of Treasury's Do Not Pay List, SBA OIG Management Alert, Report 21-06, January 11, 2021. ↩
  11. Janet L. Yellen Sworn In As 78th Secretary of the United States Department of the Treasury, Treasury press release jy0002, January 26, 2021. ↩
  12. Fact Sheet: Biden-Harris Administration Increases Lending to Small Businesses in Need, Announces Changes to PPP to Further Promote Equitable Access to Relief, White House, February 22, 2021. ↩1 ↩2
  13. Flash Report: Small Business Administration's Implementation of the Paycheck Protection Program Requirements, SBA OIG Report 20-14, May 8, 2020. ↩
  14. GAO-25-107267, COVID-19 Relief: Improved Controls Needed for Referring Likely Fraud in SBA's Pandemic Loan Programs, 2025. ↩1 ↩2
  15. SBA, Protecting the Integrity of the Pandemic Relief Programs, June 2023. ↩1 ↩2
  16. The Small Business Administration's Implementation of Recommended Controls and the Economic Aid Act, SBA OIG Report 21-19, August 12, 2021. ↩1 ↩2
  17. Business Loan Program Temporary Changes; Paycheck Protection Program: Revisions to Loan Amount Calculation and Eligibility, 86 FR 13149, SBA interim final rule, March 8, 2021; risk sentence at 86 FR 13151. ↩1 ↩2
  18. Fact Sheet: Changes to Paycheck Protection Program by Biden-Harris Administration Increase Equitable Access to Relief, SBA, published March 11, 2021. ↩
  19. GAO-22-105442, Restaurant Revitalization Fund: Opportunities Exist to Improve Oversight, July 2022. ↩1 ↩2 ↩3 ↩4
  20. Isabella Casillas Guzman, biography submitted for the House Committee on Small Business hearing of May 26, 2021. ↩
  21. Remarks on Signing of the PPP Extension Act of 2021, President Joseph R. Biden Jr., March 30, 2021, Daily Compilation of Presidential Documents, DCPD-202100270. ↩
  22. GAO-21-601, Paycheck Protection Program: Program Changes Increased Lending to the Smallest Businesses, September 2021. ↩1 ↩2 ↩3
  23. Jeff Drew, Shuttered Venue Operators Grant portal begins accepting applications, Journal of Accountancy, April 23, 2021, updated April 26, 2021. ↩1 ↩2
  24. SBA's Internal Controls to Prevent Shuttered Venue Operators Grants to Ineligible Applicants, SBA OIG Report 24-02, October 25, 2023. ↩1 ↩2 ↩3 ↩4 ↩5 ↩6
  25. Treasury Announces the Establishment of the Office of Recovery Programs, Treasury press release jy0121, April 14, 2021. ↩
  26. OIG-CA-21-020, American Rescue Plan: Application of Lessons Learned From the Coronavirus Relief Fund, Treasury Office of Inspector General, May 17, 2021. ↩
  27. Order granting temporary restraining order, Greer's Ranch Café v. Guzman, No. 4:21-cv-00651-O (N.D. Tex.), May 18, 2021. ↩
  28. Vitolo v. Guzman, Nos. 21-5517/5528 (6th Cir.), May 27, 2021. ↩
  29. SBA's Award and Payment Practices in the Shuttered Venue Operators Grant Program, SBA OIG Report 22-15, July 5, 2022. ↩
  30. SBA Administrator Announces Closure of Restaurant Revitalization Fund Program, SBA, July 2, 2021. ↩
  31. SBA's Oversight of Shuttered Venue Operators Grant Recipients, SBA OIG Report 25-21, July 22, 2025. ↩

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