Articles · COVID Economic Injury Disaster Loans (EIDL)
Reported article
The Six-Person Prime Contractor That Ran EIDL
An EIDL processing contract was routed through RER Solutions, a small Herndon, Virginia firm that the House Select Subcommittee said assigned six employees to the job and retained more than $340 million.1
The contract started before the pandemic as a much smaller disaster-loan recommendation vehicle. In 2020, the SBA expanded it noncompetitively under emergency authority. SBA-OIG later found that SBA "did not ensure fair and reasonable prices," leaving "no assurance" about the rates it paid.2 The ceiling grew to $850 million.2
RER was the prime. The real operating stack, according to the House investigation, sat underneath it. Rocket Loans received about $233 million for 20 employees. Rapid Financial Services, a Rocket-affiliated technology firm, received about $148 million and supplied the software and staff that processed application data.3 Those splits surfaced through documents the Select Subcommittee obtained from the companies.
The House report says Rapid "provided the vast majority of resources necessary to carry out SBA's contract but received only a fraction of the taxpayer funds paid for those services."3
Rapid's system could review application information in less than a second and generate fraud alerts, credit checks, and approve-or-deny recommendations.4 A tool like that can help if the humans downstream are expected to look. The House report said the Trump administration directed the creation of a batch-approval process that let SBA team leads approve dozens of applications at once, sometimes without opening individual application files.5
So the government bought speed twice. It paid contractors to make recommendations at machine pace. Then it changed the workflow so the agency could accept more recommendations at humanly impossible pace.
A direct federal relief program depended on private processing firms just as surely as PPP did, but the EIDL version stayed mostly outside the public anger aimed at loan platforms and agents.
RER, Rocket, and Rapid were not charged with a crime in the source record reviewed here. The House findings are not admissions by the companies. SBA-OIG's report is an acquisition-control critique, not a fraud indictment.
The contract the House report called "the largest individual contract across the entire federal government to respond to the pandemic's economic impact" became, in the same report's word, a "windfall."
Notes
- House Select Subcommittee on the Coronavirus Crisis, Idle on EIDL Fraud, June 14, 2022, Source document. ↩
- SBA Office of Inspector General, Evaluation of SBA's Disaster Assistance Loan Recommendation Services, Report 22-10. ↩1 ↩2
- House Select Subcommittee on the Coronavirus Crisis, Idle on EIDL Fraud, June 14, 2022, Source document. ↩1 ↩2
- House Select Subcommittee on the Coronavirus Crisis, Idle on EIDL Fraud, June 14, 2022, Source document (Rapid's system "reviewed COVID-19 EIDL application information in less than a second to provide fraud alerts, credit checks, and approval or denial recommendations"); see also the subcommittee's February 11, 2021 document-demand letters to RER, Rocket Loans, and Rapid Finance, Source document, Source document, and Source document. ↩
- House Select Subcommittee on the Coronavirus Crisis, Idle on EIDL Fraud, June 14, 2022, Source document. ↩