SBA’s Paycheck Protection Program Loan Review Processes — SBA-OIG Report 22-09

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SBA’S PAYCHECK PROTECTION PROGRAM LOAN 
REVIEW PROCESSES 
REPORT NUMBER 22-09 | FEBRUARY 28, 2022
S B A   I N S P E C T O R   G E N E R A L   E V A L U A T I O N   R E P O R T  
 

 
          XECUTIVE UMMARY
E
S
 
 
 
 
 
 
 
SBA’S PAYCHECK PROTECTION PROGRAM LOAN REVIEW PROCESSES 
Report 22-09 
February 28, 2022 
What OIG Reviewed 
We conducted this evaluation to assess the U.S. 
Small 
Business 
Administration’s 
(SBA) 
processes for reviewing Paycheck Protection 
Program (PPP) loans for eligibility and 
forgiveness. 
To receive loan forgiveness, a borrower must 
submit the loan forgiveness application to 
their lender. The lender then has 60 days to 
render a forgiveness decision to SBA. The 
agency is required to remit the appropriate 
forgiveness amount to the lender within 90 
days. 
To conduct our evaluation, we reviewed 
applicable 
laws, 
regulations, 
and 
requirements governing PPP loan eligibility 
and forgiveness in addition to guidance in 
SBA’s PPP Interim Final Rules, PPP Frequently 
Asked Questions, and internal policies and 
procedures for performing loan reviews. We 
also analyzed PPP loan data and interviewed 
staff responsible for performing loan reviews. 
What OIG Found 
SBA’s online loan forgiveness platform used by 
lenders to submit forgiveness requests is 
adequate to support SBA’s loan review 
process. However, we found that for loans 
totaling $66.4 billion SBA did not meet the 90-
day 
statutory 
requirement 
to 
remit 
forgiveness payments to lenders. 
This issue included not meeting the 90-day 
requirement for 98.2 percent of loans over $2 
million. Not completing reviews of loans and 
remitting 
payment 
promptly 
creates 
uncertainty for borrowers and PPP lenders 
who are unsure if SBA will forgive their loans. 
We also identified other matters that SBA 
should address, as follows: 
In June 2021, SBA changed its process to 
review loans prioritized by risk rather than 
order 
the 
forgiveness 
application 
was 
submitted. SBA also made changes to allow 
certain loans to be retroactively reviewed for 
fraud and eligibility after they have been 
forgiven. 
We have concerns about the impact these 
changes will have on SBA’s ability to recover 
funds for forgiven loans later determined to be 
ineligible. 
Outstanding loan forgiveness applications are 
a potential indicator of fraud. Borrowers who 
fraudulently obtained a PPP loan are unlikely 
to apply for loan forgiveness. 
We identified 1.9 million loans totaling $177.3 
billion with no forgiveness application as of 
May 2021. 
Changes 
to 
program 
requirements 
for 
Schedule C borrowers may increase the risk of 
fraudulent loans. Many of the loans made to 
Schedule C borrowers were made by lenders, 
including 
financial 
technology 
(fintech) 
lenders, who rely exclusively on third-party 
loan processing or software platform vendors 
they hire to complete loan processes. Such 
lenders do not have a relationship with SBA. 
OIG Recommendation 
We recommend that SBA develop a plan to 
ensure remaining forgiveness reviews and 
remittances are completed within 90 days as 
required by the Coronavirus Aid, Relief, and 
Economic Security (CARES) Act. 
Agency Response 
SBA management agreed with the report 
finding and recommendation, stating it 
implemented process improvements and 
policies to reduce manual review processing 
times. Management stated that 85 percent of 
reviews completed in 2021 were done within 
the 90-day requirement. The remaining 15 
percent took longer due to eligibility and 
compliance issues.

Office of Inspector General 
U.S. Small Business Administration 
 
 
 
DATE:  
February 28, 2022 
 
TO: 
 
Isabella Casillas Guzman 
Administrator 
 
FROM: 
Hannibal “Mike” Ware 
Inspector General 
 
SUBJECT: 
SBA’s Paycheck Protection Program Loan Review Processes 
 
This report presents the results of our evaluation of the U.S. Small Business 
Administration’s Paycheck Protection Program Loan Review Processes. We considered 
management’s comments on the draft of this report when preparing the final report. 
Management agreed with the recommendation. 
We appreciate the cooperation and courtesies provided by your staff. If you have any 
questions, contact me or Andrea Deadwyler, Assistant Inspector General for Audits, at 
(202) 205-6586. 
 
cc: 
Patrick Kelley, Associate Administrator, Office of Capital Access 
Antwaun Griffin, Chief of Staff 
Arthur Plews, Deputy Chief of Staff 
Peggy Delinois Hamilton, General Counsel, Office of General Counsel 
John Miller, Deputy Associate Administrator, Office of Capital Access 
Michael Simmons, Attorney Advisor, Office of General Counsel 
 
Joshua Barnes, Acting Director, Office of Continuous Operations and Risk  
Management 
Jason Bossie, Chief Financial Officer 
Tonia Butler, Director, Office of Internal Controls

 
 
Table of Contents 
Introduction ............................................................................................................................................................ 1 
SBA’s Loan Review Process .......................................................................................................................... 1 
Forgiveness Requirements ....................................................................................................................... 1 
Initial Loan Review Process (Initiated October 2020) .................................................................. 2 
Previous Work ................................................................................................................................................... 4 
Objective............................................................................................................................................................... 4 
Results ................................................................................................................................................................... 4 
Finding: SBA Did Not Always Meet the 90-Day Statutory Requirement to Remit Loan 
Forgiveness Payments ........................................................................................................................................ 6 
Recommendations ............................................................................................................................................ 9 
Other Matters ...................................................................................................................................................... 10 
Significant Changes to the Loan Review Process .............................................................................. 10 
Prioritizing Loan Reviews Based on Risk ........................................................................................ 10 
Review of Loans $2 million and Greater .......................................................................................... 10 
SBA Needs to Monitor Loans with Outstanding Loan Forgiveness Applications ................. 11 
SBA Should Assess How Changes in Program Requirements Affect the Loan Eligibility and 
Forgiveness Review Process ..................................................................................................................... 12 
Analysis of Agency Response ........................................................................................................................ 14 
Summary of Actions Necessary to Close the Recommendation .................................................. 14 
Recommendation 1 ................................................................................................................................... 14 
Appendix I: Objectives, Scope, and Methodology .................................................................................. 15 
Objectives ......................................................................................................................................................... 15 
Use of Computer-Processed Data ............................................................................................................ 15 
Appendix II: Management Comments ........................................................................................................ 16 

 
1 
Introduction 
This report presents the results of our evaluation of U.S. Small Business Administration’s 
(SBA) processes for reviewing Paycheck Protection Program (PPP) loans for eligibility and 
forgiveness. This report is the first in a series of reviews that will include an in-depth 
analysis of PPP loans to assess the effectiveness of SBA’s PPP loan reviews. 
The President signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into 
law on March 27, 2020 to provide economic relief from the effects of the Coronavirus 
Disease 2019 (COVID-19) pandemic. One of the Act’s most significant provisions, Section 
1102, provided $349 billion for the PPP under section 7(a) of the Small Business Act. 
The PPP provides fully guaranteed SBA loans for certain eligible small businesses, 
individuals, and nonprofit organizations that can be forgiven if loan proceeds were used as 
required by the CARES Act. Eligible expenses include payroll, rent, utilities, and other 
limited uses. On April 24, 2020, the President signed the Paycheck Protection Program 
Health Care Enhancement Act to provide an additional $310 billion to PPP. 
On June 5, 2020, the President signed the Paycheck Protection Program Flexibility Act to 
provide borrowers additional relief, including reducing the percentage of eligible expenses 
used for payroll costs and extending the maturity period for loans. On July 4, 2020, 
Congress passed legislation that extended the program until August 8, 2020. As of August 8, 
2020, 5,460 PPP lenders approved approximately 5.2 million PPP loans totaling $525 
billion. 
On December 27, 2020, the President signed the Economic Aid to Hard-Hit Small 
Businesses, Nonprofits, and Venues Act, which included an additional $284 billion of 
funding for a second round of forgivable loans through the PPP. 
As of May 12, 2021, lenders had submitted 3.2 million loan forgiveness applications to SBA 
on loans totaling $343 billion. SBA has remitted payments for 3.1 million applications with 
loan forgiveness totaling $263 billion, not including interest. 
SBA’s Loan Review Process 
Forgiveness Requirements 
To receive loan forgiveness, a borrower must complete and submit the loan forgiveness 
application to their lender. The lender has 60 days to review the application, decide on loan 
forgiveness, and issue a forgiveness decision to SBA. The agency must remit the 
appropriate forgiveness amount to a lender within 90 days of receiving the lender’s 
forgiveness decision.1 
 
 
 
1 CARES Act Section 1106 (c)(3), 15 USC §9005. 

 
2 
Initial Loan Review Process (Initiated October 2020) 
Government contractors and SBA federal and contract staff, under the supervision of SBA’s 
Office of Capital Access, conduct the loan review process. The process implemented in 
October 2020 consists of 
• an automated review of all loans at an individual and aggregate level, 
• preliminary manual reviews performed by government contractors to resolve loans 
identified for follow-up during automated screenings, and 
• manual reviews performed by SBA, as deemed necessary, based on loan dollar 
amount, random statistical sampling, and loans unresolved after automated and 
preliminary manual reviews. 
As initially implemented, reviews were conducted on loans with a submitted forgiveness 
application and were prioritized based on the date received. However, SBA has the 
authority to review a PPP loan of any size at any time and, when warranted, direct 
borrowers to repay funds used for unauthorized purposes.2 
SBA screened all 5.2 million PPP loans disbursed in 2020 through an automated tool to 
identify issues of potential noncompliance with program requirements. The automated 
review resulted in about 1.96 million loans being flagged with a hold code that triggered 
the need to be considered for a manual review. 
To resolve these loans, SBA used data analytics based on completed manual reviews to 
identify groups of loans with characteristics that indicated minimal noncompliance that 
could be resolved and reclassified as not needing a manual review. For example, loans of 
$150,000 or less that do not have an excessive number of hold codes, or hold codes related 
to fraud. 
Based on the results of 20,000 completed manual reviews, SBA’s contractor then used 
machine learning (a type of programmed artificial intelligence) to identify additional loans 
that could be resolved without conducting a manual review. Subsequently, SBA resolved 
about 1.7 million of the1.96 million loans without performing a manual review, speeding 
up the forgiveness process for these loans. 
Loans with unresolved hold codes, such as a borrower’s criminal record or business 
affiliation issues, are manually reviewed by government contractors. The objective of the 
contractor manual review is to identify and resolve hold codes through the review of loan 
data, research, and requests for documentation. 
The contractor’s manual review results in a recommendation of either “no further action” 
or “requires further action.” Loans dispositioned as “no further action” were forgiven for 
the recommended amount without SBA manual review unless they met other review 
criteria. 
 
2 85 Federal Register 33010 (III)(1)(c) and 85 FR 20811 (III)(2)(S). 

 
3 
For loans dispositioned as requiring further action, the contractor prepares a report 
detailing why further action is required. SBA conducts an additional manual review on all 
loans requiring further action. 
SBA manually reviewed loans of $2 million or greater, a statistically valid sample of loans, 
and loans with unresolved hold codes. SBA uses an online loan forgiveness platform to 
complete the reviews. 
The platform contains resources for reviewers, including a questionnaire specific to the 
level of review. SBA has three levels of manual reviews it performs to determine eligibility 
and forgiveness: 
1. R1 (sampled loans less than $150,000) 
• An R1 review is the least extensive manual review performed. The review focuses 
on the eligibility of the loan. 
2. R2 (sampled loans greater than $150,000 but less than $2 million) 
• An R2 review includes reviewing documentation and calculations to support the 
responses for questions related to the eligibility, calculation, and forgiveness of the 
loan. 
3. R3 (all loans greater than $2 million and loans with hold codes) 
• An R3 review is the most extensive manual review performed on the largest loans 
and loans flagged for possible noncompliance. In addition to all the areas covered by 
an R2, the R3 also assesses the borrower’s need for the PPP loan based on the 
required certification and supporting documentation. 
As of May 12, 2021, more than 99 percent of forgiven loans were based on an automated 
review (see Table 1). 
Table 1: Completed Forgiveness Reviews by Review Type 
Review Type 
Completed Reviews 
Completed Reviews 
(percent) 
Automated 
3,101,063 
99.08 
R1 
22,663 
0.72 
R2 
4,866 
0.16 
R3 
1,198 
0.04 
Total 
3,129,790 
-- 
Source: SBA Forgiveness Platform data 
On August 10, 2020, SBA launched its online loan forgiveness platform for lenders to 
submit forgiveness decisions and requests. However, SBA did not begin manually 
reviewing forgiveness decisions necessitating a review until finalization of its Master Loan 
Review Plan on October 2, 2020. 
The agency did not begin performing manual reviews of loans $2 million or greater until 
January 20, 2021. In June 2021, SBA made significant changes to its loan forgiveness and 
loan review processes. See the Other Matters section in this report for additional details. 

 
4 
Previous Work 
“Key Recommendations Based on Lessons Learned from Prior COVID-19 Economic Injury 
Disaster and Paycheck Protection Program Loan Programs,” December 23, 2020 
Provided SBA key recommendations to strengthen internal controls to prevent fraud and 
ensure only eligible businesses receive funds. Find this memorandum on our OIG Reports 
site. 
Inspection of SBA’s Implementation of the Paycheck Protection Program, Report 21-07, 
January 14, 2021 
SBA loosened controls in an effort to expedite economic assistance during the COVID-19 
pandemic, increasing the likelihood of fraudulent loans. We also found aspects of SBA’s 
implementation of the PPP that could prevent Congress and SBA management from having 
the information needed to determine if program objectives were fully met. Find this 
inspection report on our OIG Reports site. 
Duplicate Loans Made Under the Paycheck Protection Program, Report 21-09, March 15, 
2021 
We determined SBA did not always have sufficient controls in place to detect and prevent 
duplicate PPP loans. As a result, lenders made more than one PPP loan disbursement to 
4,260 borrowers with the same tax identification number and borrowers with the same 
business name and address. Find this report on our OIG Reports site. 
The Small Business Administration’s Implementation of Recommended Controls and the 
Economic Aid Act, Report 21-19, August 12, 2021 
We found SBA has either implemented or begun acting on all of the OIG recommendations 
to strengthen internal controls related to the PPP, as outlined in the OIG Key 
Recommendations memorandum. Find this report on our OIG Reports site. 
Objective 
Our objective was to assess SBA’s processes for reviewing PPP loans for eligibility and 
forgiveness. 
Results 
Based on our assessment, SBA’s online loan forgiveness platform used by lenders to submit 
forgiveness requests is adequate to support SBA’s loan review process. Specifically, the 
platform appears to support the assignment of loans to reviewers, contains key 
information, resources, and checklists for staff to complete reviews, and appears to be user 
friendly. 
We reviewed the checklists used by SBA staff to complete forgiveness reviews and found 
that the checklists included all significant program requirements and appeared to be 
designed to provide a detailed review of loans. 
We found that SBA has processed over 3.1 million loan forgiveness applications but did not 
always meet the statutory 90-day requirement for remitting payments to lenders. Of note, 
SBA did not meet this requirement for nearly all (98.2 percent) of PPP loans $2 million or 
greater. 

 
5 
We also identified the following other matters SBA should address moving forward: 
• Continue to monitor the impact of significant changes made to its loan review process 
that allows for remitted forgiveness payment and retroactive review of certain loans, to 
mitigate risk associated with a pay and chase environment and ensure program 
objectives are met. 
• Continue to closely monitor loans for which forgiveness applications have not yet been 
submitted. We believe that a portion of these loans were obtained by fraudulent 
applicants who are less likely to submit a forgiveness application because they have 
already obtained the funds with no intentions to use them appropriately or repay the 
loan. 
• Assess how recent changes to requirements for Schedule C borrowers has affected 
fraud risk. Many of the Schedule C loans were made by lenders that made few PPP loans 
in 2020. These lenders also rely exclusively on third-party loan processing or software 
platform vendors they hire to complete loan processes. 
 

 
6 
Finding: SBA Did Not Always Meet the 90-Day Statutory 
Requirement to Remit Loan Forgiveness Payments 
The CARES Act requires SBA to remit the appropriate forgiveness amount to a lender 
within 90 days.3 As of May 12, 2021, SBA exceeded the 90-day requirement to remit 
forgiveness payment for 98.2 percent of loans $2 million or greater with a processed loan 
payment. 
The Government Accountability Office (GAO) reported that on average SBA completed its 
determination and remitted loan forgiveness payments for loans over $2 million in 181 
days.4 Overall, SBA exceeded the 90-day requirement for 107,168 loans, totaling $66.4 
billion. 
Table 2: Remitted Forgiveness Payments Exceeding 90 Days 
Loan Value (dollars) 
Loans with 
Remitted 
Forgiveness 
Payment 
Remittance Not 
Completed in 90 
Days (percent) 
Value of Loans 
Unremitted in 
90 Days 
(dollars) 
1 - 50,000 
2,086,066 
27,247 (1.3 percent) 
444,660,576 
50,001 - 149,999 
657,876 
7,584 (1.2 percent) 
664,221,492 
150,000 - 999,999 
353,255 
22,045 (6.2 percent) 
7,948,843,052 
1,000,000 - 1,999,999 
31,780 
3,228 (10.1 percent) 
4,766,798,882 
2,000,000 - 10,000,000 
813 
799 (98.2 percent) 
2,682,667,163 
Total 
3,129,790 
60,903 (1.9 percent) 
16,507,191,165 
Source: SBA Forgiveness Platform and Mainframe Loan Accounting System Data 
 
 
 
3 Public Law 116-136 Section 1106 (c)(3), 15 USC § 9005. 
4 GAO-21-577, Paycheck Protection Program (July 2021). 

 
7 
Table 3: In Process Forgiveness Payments Exceeding 90 Days 
Loan Value (dollars) 
Loans in 
Forgiveness 
Process 
Remittance Not 
Completed in 90 Days 
(percent) 
Value of Loans 
Unremitted in 
90 Days 
(dollars) 
1 - 50,000 
47,126 
13,533 (28.7 percent) 
257,345,543 
50,001 - 149,999 
15,261 
3,178 (20.8 percent) 
287,074,650 
150,000 - 999,999 
26,218 
15,451 (58.9 percent) 
6,293,853,135 
1,000,000 - 1,999,999 
5,591 
3,450 (61.7 percent) 
4,950,042,754 
2,000,000 - 10,000,000 
16,839 
10,653 (63.3 percent) 
38,136,077,480 
Total 
111,035 
46,265 (41.7 percent) 
49,924,393,562 
Source: SBA Forgiveness Platform and Mainframe Loan Accounting System Data 
SBA management stated several factors contributed to the delay in manual reviews, 
including the completion of the Master Loan Review Plan in October 2020. SBA and the 
Department of the Treasury did not finalize the eligibility and forgiveness review checklist 
for loans of $2 million or greater until January 2021, after the issuance of the loan necessity 
questionnaire in December 2020. SBA also cited the need to redirect resources to 
competing priorities. The agency also had delays in budget and funding approvals for the 
contractor tasked with completing initial reviews. Management acknowledged that not 
meeting the requirement causes uncertainty for borrowers awaiting a forgiveness decision. 
They may be unsure if SBA will determine their loan will be fully forgiven. 
The uncertainty borrowers and lenders face could potentially impact business and lending 
decisions they make. While the overall percentage of loans exceeding the 90-day 
requirement may be low, over 107,000 borrowers were affected and waited more than 3 
months for remitted forgiveness. 
SBA’s initial review process required all loans of $2 million or greater to be manually 
reviewed by the agency. In June 2021, SBA revised its loan review process and stopped 
reviewing all loans of $2 million or greater and, in certain instances, will retroactively 
manually review loans for fraud and ineligibility after they have been forgiven. SBA 
management stated that the changes were made in part because the agency was not 
meeting the 90-day statutory requirement to remit forgiveness payments. 
While changes to the loan forgiveness process may mitigate the problem of not meeting the 
90-day requirement going forward, SBA should take immediate action to complete reviews 
currently in process that are close to or over 90 days. It should also examine the primary 
and systemic issues for not meeting the requirement and apply the lessons learned to the 
remaining forgiveness reviews to ensure eligible borrowers loans are forgiven in a timely 
manner and to proactively address potentially ineligible or fraudulent loans. 
We have concerns regarding how the new process could affect SBA’s ability to recover 
funds from ineligible and fraudulent borrowers. When the PPP launched in 2020, SBA’s 
fraud risk management approach for PPP loans was intentionally developed with more 
fraud and eligibility controls in the loan forgiveness phase rather than the initial 
application stage. 

 
8 
SBA’s changes to this process, including forgiving and remitting loans prior to an eligibility 
or forgiveness review, could diminish SBA’s ability to recover funds, create a pay and chase 
environment, and result in the government expending additional resources. For example, 
loans determined to be fraudulent after payment has been remitted will require the 
government to spend time retrieving the original loan amount from the fraudulent 
borrower and the remittance amount from the lender. 
 
 

 
9 
Recommendations 
We recommend the Administrator direct the Associate Administrator for the Office of 
Capital Access to 
1. Develop a plan to ensure remaining forgiveness reviews and remittances are completed 
within 90 days as required by the CARES Act. 
 
 

 
10 
Other Matters 
Significant Changes to the Loan Review Process 
In June 2021, SBA made significant changes to its loan forgiveness and loan review 
processes. Below is a summary of those significant changes. We reviewed documentation 
provided by SBA showing its justification for the changes. We also reviewed SBA’s revised 
loan review procedures. 
Prioritizing Loan Reviews Based on Risk 
SBA’s new process for loan reviews prioritizes reviews based on fraud risk rather than 
forgiveness status. The change will allow SBA to review loans with a high risk of fraud that 
have not yet filed for forgiveness. 
The change also means that a certain number of loans will be retroactively manually 
reviewed after they have been forgiven. SBA can review and recover funds used for 
unauthorized purposes at any time. 
However, the Office of Management and Budget established that for Executive Offices to be 
effective, they should prioritize efforts toward preventing improper payments from 
occurring to avoid operating in a pay and chase environment. 
Review of Loans $2 million and Greater 
SBA’s initial review process required all loans of $2 million or greater to be manually 
reviewed by SBA, as established by the former SBA Administrator and former Treasury 
Secretary in April 2020. GAO reported that according to Treasury officials, it was prudent 
for SBA to take additional time to review the largest loans given the additional risk 
associated with these loans.5 
However, in June 2021, SBA decided it will no longer perform manual reviews of all loans 
$2 million or greater. Instead, SBA will review all loans of $2 million and greater with 
unresolved hold codes and a statistically valid sample of loans $2 million and greater. SBA 
is also eliminating the use of loan necessity questionnaires, which collect additional 
information on borrowers of $2 million or greater and will no longer perform an 
assessment of loan necessity for loans of $2 million or greater.6 
SBA stated completed loan necessity reviews found most borrowers met the good faith 
requirement and the reviews contributed to SBA exceeding the 90-day statutory 
requirement to remit forgiveness payments to lenders. 
SBA management said the changes help the agency meet the 90-day statutory requirement 
to remit forgiveness payments to lenders and cited three benefits of the new approach: 1) 
better ability to target fraud; 2) better use of government resources; and 3) alleviation of 
borrower uncertainty. 
 
5 GAO-21-577, Paycheck Protection Program (July 2021). 
6 SBA forms 3509 and 3510. 

 
11 
SBA management also stated the new approach, which includes in some cases forgiving 
loans prior to performing manual review, does not increase SBA’s financial exposure due to 
the 100 percent guaranty on PPP loans and the lender hold harmless provisions, 
introduced by the CARES Act and strengthened by the Economic Aid Act7. As a result, SBA 
will then have to pursue the borrower to repay funds, which could prove more challenging 
and result in taxpayer funds being spent on ineligible loans. 
SBA should continue to monitor the impact of significant changes made to the loan review 
process to ensure loans continue to be adequately reviewed for program requirements and 
that SBA can recover funds for loans not meeting requirements. 
SBA Needs to Monitor Loans with Outstanding Loan Forgiveness 
Applications 
Changes made by SBA to review high risk loans that have not yet filed for forgiveness could 
address an area of concern we identified. As of May 12, 2021, 1.9 million loans, totaling 
$177.3 billion, did not have a lender-submitted forgiveness application (see Table 4). 
The large number of borrowers who have not applied for forgiveness could be a strong 
indicator of fraud because borrowers who fraudulently obtained a PPP loan are unlikely to 
apply for loan forgiveness because they have already obtained the funds with no intention 
to use the funds appropriately or repay the loan. 
Table 4: Outstanding 2020 PPP Loan Forgiveness 
Loan Amount 
(dollars) 
Number of Loans Not Yet 
Submitted for Loan 
Forgiveness (percent of 
total outstanding) 
Value of Loans 
1 - 50,000 
1,377,946 (72.5 percent) 
22,668,263,472 
50,001 - 149,999 
298,298 (15.7 percent) 
25,407,902,118 
150,000 - 999,999 
198,122 (10.4 percent) 
65,269,935,262 
1,000,000 - 1,999,999 
15,852 (0.8 percent) 
22,021,392,930 
2,000,000 - 10,000,000 
11,332 (0.6 percent) 
41,904,667,226 
Total 
1,901,550 (100 percent) 
177,272,161,008 
Source: SBA Forgiveness Platform and Mainframe Loan Accounting System Data 
SBA has taken action to reduce the number of outstanding forgiveness applications. On 
August 4, 2021, SBA launched the PPP Direct Forgiveness Portal, a streamlined loan 
forgiveness site for borrowers with loans of $150,000 or less. For the PPP loans made in 
2020, this represented 87 percent of the PPP loans totaling $147 billion. 
This online portal allows borrowers to apply for loan forgiveness directly with SBA if their 
lender is participating. For those who are eligible, the portal should make it easier and 
quicker for borrowers to receive loan forgiveness. As of October 31, 2021, loans that did 
not have a lender submitted forgiveness application decreased to approximately 402,000. 
 
7 The hold harmless provision is when the lender doesn’t have financial responsibility to repay the loan due to a 
borrower’s failure to comply with program criteria. 

 
12 
While SBA has taken action to reduce the number of outstanding forgiveness applications, 
it should continue to closely monitor loans with outstanding forgiveness applications. As 
established by the PPP Flexibility Act, a covered period for borrowers ends the earlier of 24 
weeks after the date of loan origination or December 31, 2020. Loan recipients then have 
up to 10 months from the last day of their covered period to file for loan forgiveness or 
begin making payments on their loan.8 
A borrower may apply for forgiveness at any time up to the maturity date of their loan. For 
example, a borrower whose covered period ended on December 31, 2020 had until October 
31, 2021 to apply for forgiveness before loan repayment begins. After the 10-month 
deferral period, if a borrower has not applied for loan forgiveness, they must begin making 
principal and interest payments. 
As SBA has simplified the loan forgiveness process and most borrowers are receiving full 
forgiveness, forgiveness submission without having to begin making loan payments is 
generally expected. Most 2020 borrowers were likely to apply for forgiveness by October 
31, 2021 to avoid making loan payments, and lenders have 60 days to review a forgiveness 
application. SBA can expect that approximately 402,000 loan forgiveness applications will 
be submitted by lenders to SBA by December 30, 2021. 
SBA Should Assess How Changes in Program Requirements 
Affect the Loan Eligibility and Forgiveness Review Process 
OIG oversight has revealed strong indicators of widespread potential abuse and fraud in 
the PPP. Since the program began, we have investigated reports of suspected fraud 
received from OIG Hotline complaints, financial institutions, and other law enforcement 
agencies. 
Additional concerning trends emerged in 2021 after SBA made changes to expand access to 
the program for borrowers who file a 1040, Schedule C. Multiple third-party financial 
institutions contacted OIG expressing concerns regarding PPP deposits in personal 
accounts for individuals who they did not believe owned businesses. 
In March 2021, SBA issued an interim final rule that allowed those who file an IRS Form 
1040, Schedule C to calculate their maximum loan amount using gross income rather than 
net income.9 The change reduced barriers to accessing the PPP for sole proprietors, 
independent contractors, and self-employed individuals. The maximum loan amount for a 
Schedule C business with no employees remained $20,833. 
Based on our analysis of the PPP loan data, many of the Schedule C loans were made by 
lenders that rely exclusively on third-party loan processing or software platform vendors 
they hire to complete loan processes. These vendors do not often have a relationship with 
SBA. 
Seven of the top 15 lenders, based on 2021 PPP volume, made over 2.4 million loans, or 
more than 18,000 loans a day, between January 2021 and May 2021. These lenders made 
 
8 Public Law 116-142 Sec. 3 (c)(1). 
9 86 FR 13149. 

 
13 
fewer than 22,000 PPP loans combined in 2020. These seven lenders included financial 
technology (fintech) lenders, Community Development Financial Institutions, and Small 
Business Lending Companies. 
We believe that these lenders and their reliance on third-party vendors will present SBA 
with several challenges moving forward. Within the context of the PPP eligibility and 
forgiveness process, we believe it is important for SBA to focus targeted efforts on these 
types of loans and review appropriate documentation to ensure these smaller loans were 
made to eligible businesses and minimize the losses associated with forgiveness of 
fraudulent loans.

 
14 
Analysis of Agency Response 
SBA management provided formal comments to the draft report, which are included in 
their entirety in Appendix II. Management agreed with the finding and recommendation, 
and the information provided will resolve the recommendation. We considered 
management’s comments when preparing this final report. 
Summary of Actions Necessary to Close the Recommendation 
The following section details the status of our recommendation and the actions necessary 
to close it. 
Recommendation 1 
Develop a plan to ensure remaining forgiveness reviews and remittances are completed 
within 90 days as required by the CARES Act. 
Status: Resolved 
SBA management agreed with the recommendation, stating it implemented process 
improvements and policy changes that streamlined the loan review process. SBA 
management stated that 85 percent of manual forgiveness reviews completed in 2021 were 
processed in 90 days or less. The remaining 15 percent took longer than 90 days because of 
compliance or eligibility issues. SBA will continue to be cautious and deliberate when 
reviewing higher-risk loans and loans where the loan documentation or any other 
information indicates that the borrower may be ineligible for a PPP loan, loan amount, or 
loan forgiveness. This recommendation is resolved and can be closed when SBA provides 
evidence that the stated process improvements and policy changes have been 
implemented. SBA must also provide evidence that those changes have been effective in 
ensuring reviews and remittances are completed within 90 days, as required by the CARES 
Act, to the greatest extent possible. In subsequent correspondence, SBA agreed to May 31, 
2022 as the final action date for this recommendation. 
 

 
15 
Appendix I: Objectives, Scope, and Methodology 
Objectives 
Our objective was to assess SBA’s processes for reviewing Paycheck Protection Program 
loans for eligibility and forgiveness. To answer our objective, we reviewed laws, 
regulations, and requirements governing PPP loan eligibility and forgiveness; reviewed 
SBA’s processes and procedures for PPP loan eligibility and forgiveness reviews; and 
interviewed key personnel responsible for overseeing the loan review process. 
Our scope of work covered March 2020 through May 2021. 
We interviewed officials from the Office of Capital Access and conducted walkthroughs 
with SBA staff who perform manual loan reviews. We obtained and reviewed all pertinent 
federal, departmental, and SBA specific regulations, policies, procedures and guidance, 
including the CARES Act, Paycheck Protection Program and Health Care Enhancement Act, 
Paycheck Protection Program Flexibility Act of 2020, Economic Aid Act, IFRs, FAQs, 
Procedural Notices, program forms, and policies and procedures for conducting loan 
reviews that pertained to the PPP. 
We conducted this evaluation in accordance with the Council of the Inspectors General on 
Integrity and Efficiency’s Quality Standards for Inspection and Evaluation. Those standards 
require that we adequately plan and perform the evaluation to obtain sufficient and 
appropriate evidence to provide a reasonable basis for our findings and conclusions based 
on our objective. We believe that the evidence we obtained provides a reasonable basis for 
our conclusions based on our objective. 
Use of Computer-Processed Data 
We relied on information from SBA’s Mainframe Loan Accounting System, E-Tran, 
Forgiveness Platform, and data from the Office of Performance and Systems Management 
to conduct our analyses. We conducted numerous analyses of PPP data to determine if 
SBA’s reported data was reliable. 
Prior OIG reports determined that certain elements of SBA’s PPP data were not reliable 
because they were inaccurate, incomplete, or both. Specifically, we found that job statistics 
were inaccurate and incomplete; underserved market data was incomplete; and the North 
American Industry Classification System code data was incomplete. 
We previously provided SBA recommendations in the relevant reports to address the 
identified data reliability issues. We believe the data elements used in this report are 
sufficiently reliable to support our report conclusion. 
 
 

16 
Appendix II: Management Comments 
SBA RESPONSE TO EVALUATION REPORT 

U.S. SMALL BUSINESS ADMINISTRATION 
WASHINGTON, DC 20416 
Date: 
January 19, 2022 
From: Jihoon Kim 
Director 
Office of Financial Program Operations 
To: 
Hannibal “Mike” Ware
Office of the Inspector General 
 
Inspector General
Subject: OIG Draft Report – Evaluation of SBA’s Paycheck Protection Program Loan Review Processes 
(Project 21005) 
OIG Recommendation: 
We recommend that SBA develop a plan to ensure remaining forgiveness reviews and remittances are 
completed within 90 days as required by the CARES Act. 
SBA Response: 
SBA agrees with the recommendation. SBA designed a loan review process to maximize program 
integrity and optimize use of SBA’s loan review resources, considering the challenges posed by the 
volume of PPP loans and the statutory timeframe for reviews. As OIG detailed in its audit report, SBA 
experienced delays during 2020 in beginning manual reviews that negatively impacted SBA’s 
compliance with the 90 day deadline for completing forgiveness reviews. Since the time that OIG’s 
field work for this audit report was completed, SBA has implemented process improvements and 
policy changes that have streamlined the loan review process and led to improved forgiveness 
processing times and SBA compliance with the 90 day statutory deadline. 
In fact, 85% of manual forgiveness reviews completed in 2021 were processed in 90 days or less. An 
analysis of manual review data will demonstrate that SBA forgiveness processing times continue to 
improve as older inventory is completed. The remaining 15% took longer than 90 days because of a 
potential compliance or eligibility issue that needed to be researched and resolved before SBA could 
finalize a review. While SBA strives to complete manual forgiveness reviews as quickly as possible, SBA 
will continue to be cautious and deliberate when reviewing higher-risk loans and loans where the loan 
documentation or any other information indicates that the borrower may be ineligible for a PPP loan, or 
may be ineligible to receive the loan amount or loan forgiveness amount claimed by the borrower.

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