GAO-24-107395 — Small Business Administration: Progress and Work Remaining to Implement Key Management Improvements (March 6, 2024)

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Highlights of GAO-24-107395, a testimony by the U.S. Government Accountability Office before the Committee on Small Business, House of Representatives, dated March 6, 2024, on the Small Business Administration's progress in implementing key management improvements. GAO reports that since February 2020 it has made 23 key recommendations to SBA covering the Paycheck Protection Program, the COVID-19 Economic Injury Disaster Loan program and the Disaster Loan Program, of which SBA has fully addressed 10 and has not yet fully addressed 13. It states that SBA developed a loan review process in December 2020, completed a formal fraud risk assessment and strategy in August 2023, and that added safeguards produced more than $12 billion in savings by the end of fiscal year 2023. Outstanding items include data analytics to verify applicant information and an interagency plan on barriers to access.

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United States Government Accountability Office 
 
  
Highlights of GAO-24-107395, a testimony 
before the Committee on Small Business, 
House of Representatives 
 
March 6, 2024 
SMALL BUSINESS ADMINISTRATION 
Progress and Work Remaining to Implement Key 
Management Improvements  
What GAO Found 
In response to the economic downturn caused by the COVID-19 pandemic, the 
Small Business Administration (SBA) quickly set up the Paycheck Protection 
Program (PPP), COVID-19 Economic Injury Disaster Loan (COVID-19 EIDL) 
program, and other relief programs. SBA also administers a Disaster Loan 
Program that helps small businesses and others recover after natural disasters.  
Since February 2020, GAO has made recommendations to improve SBA 
programs, including 23 key recommendations. SBA fully addressed 10 of the key 
recommendations, including the following: 
• 
PPP oversight. Because SBA initially had limited safeguards, GAO 
recommended in June 2020 that it implement plans to respond to PPP risks, 
help ensure program integrity, and address potential fraud. In response, SBA 
developed a loan review process in December 2020. As of the end of fiscal 
year 2023, GAO estimated that SBA’s use of additional safeguards in PPP 
and other COVID programs had resulted in more than $12 billion in savings. 
• 
Assessment of fraud risks. SBA did not conduct a formal fraud risk 
assessment before implementing PPP or COVID-19 EIDL. In March 2021, 
GAO recommended that SBA conduct a formal assessment and develop a 
strategy to manage fraud risks for each program. SBA completed these steps 
in August 2023. 
SBA has not yet fully addressed 13 of these recommendations, including the 
following:  
• 
Enhancing data analytics. In May 2023, GAO recommended that SBA 
identify data that could help verify applicant information and detect potential 
fraud. GAO also recommended that SBA develop cross-program data 
analytics that would better identify applicants who tried to defraud multiple 
programs. According to SBA, to begin addressing these recommendations, it 
has procured third-party services to help validate customer identity and has 
begun a comprehensive review of its data analytics. 
• 
Addressing access barriers. GAO found in December 2021 that SBA’s 
Disaster Loan Program and five other federal programs did not have key 
information for examining barriers to access and disparate recovery 
outcomes among various socioeconomic and demographic groups. GAO 
recommended SBA work with two other agencies to implement an 
interagency plan to address these equity issues. SBA officials said the 
agencies are in the process of developing such a plan. 
In addition, SBA’s independent financial statement auditor has issued four 
consecutive disclaimers of opinion on SBA’s consolidated financial statements 
since fiscal year 2020. SBA was unable to support a significant number of 
transactions and account balances related to PPP and COVID-19 EIDL. The 
auditor identified six material weaknesses in internal controls over financial 
accounting, including in controls for PPP and COVID-19 EIDL. GAO supports the 
auditor’s recommendations to address these weaknesses and encourages SBA 
to develop and implement a corrective action plan to address them. 
View GAO-24-107395. For more information, 
contact Courtney LaFountain at (202) 512-
8678 or lafountainc@gao.gov. 
Why GAO Did This Study 
Since spring 2020, SBA has 
administered four pandemic relief 
programs, including PPP and COVID-
19 EIDL. PPP provides potentially 
forgivable loans to small businesses. 
COVID-19 EIDL provides low-interest 
loans of up to $2 million for operating 
and other expenses, as well as 
advances (grants). 
Concerns about SBA’s implementation 
of PPP and COVID-19 EIDL led GAO 
to include emergency loans for small 
businesses on its High-Risk List in 
March 2021. SBA made or guaranteed 
more than $1 trillion in loans and 
grants and assisted more than 10 
million small businesses through its 
relief programs. In addition, SBA has 
continued to make loans under its 
Disaster Loan Program.  
Among other things, this testimony 
focuses on the status of selected 
recommendations GAO has made to 
SBA on its pandemic relief and 
disaster loan programs, and on issues 
related to SBA’s financial accounting. 
This testimony is based largely on the 
reports GAO issued since February 
2020 containing the 23 key 
recommendations. For those reports, 
GAO reviewed SBA documentation, 
analyzed program data, and 
interviewed officials from SBA and 
other federal agencies. GAO also 
reviewed the opinions of SBA’s 
independent financial statement 
auditor.

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