COVID-19 Pandemic EIDL and PPP Loan Fraud Landscape Recommendations Update — SBA-OIG White Paper, Report 25-10

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U.S. SMALL BUSINESS ADMINISTRATION 
OFFICE OF INSPECTOR GENERAL 
COVID-19 Pandemic EIDL and 
PPP Loan Fraud Landscape 
Recommendations Update 
White Paper 
Report 25-10 
March 31, 2025 

 
 
Make a Difference 
To report fraud, waste, or mismanagement, contact the U.S. Small Business Administration’s 
Office of Inspector General Hotline at https://www.sba.gov/oig/hotline. You can also write to the 
U.S. Small Business Administration, Office of Inspector General, 409 Third Street, SW (5th Floor), 
Washington, DC 20416. In accordance with the Inspector General Act of 1978, codified as 
amended at 5 U.S.C. §§ 407(b) and 420(b)(2)(B), confidentiality of a complainant’s personally 
identifying information is mandatory, absent express consent by the complainant authorizing the 
release of such information. 
NOTICE: 
Pursuant to the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, Public 
Law 117-263, Section 5274, any nongovernmental organizations and business entities identified 
in this report have the opportunity to submit a written response for the purpose of clarifying or 
providing additional context as it relates to any specific reference contained herein. Comments 
must be submitted to AIGA@sba.gov within 30 days of the final report issuance date. We 
request that any comments be no longer than two pages, Section 508 compliant, and free from 
any proprietary or otherwise sensitive information. The comments may be appended to this 
report and posted on our public website. 
 

OFFICE OF INSPECTOR GENERAL 
U.S. SMALL BUSINESS ADMINISTRATION 
MEMORANDUM 
409 Third St. SW, Washington, DC 20416 • (202) 205-6586 • Fax (202) 205-7382 
Date: 
March 31, 2025 
To: 
Kelly Loeffler 
Administrator 
From: 
Sheldon Shoemaker 
Deputy Inspector General 
Subject: 
White Paper on COVID-19 Pandemic EIDL and PPP Loan Fraud Landscape 
Recommendations Update (Report 25-10) 
Attached please find a copy of the white paper COVID-19 Pandemic EIDL and PPP Loan Fraud 
Landscape Recommendations Update (Report 25-10), which is provided in response to 
congressional interest. This report updates Congress on progress made by the U.S. Small 
Business Administration (SBA) on the 39 open pandemic-related recommendations referenced in 
OIG Report 23-09, COVID-19 Pandemic EIDL and PPP Loan Fraud Landscape. 
We appreciate the cooperation and courtesies provided by your staff. If you have questions or 
need additional information, please contact Andrea Deadwyler, Assistant Inspector General for 
Audits, at (202) 205-6586. 
cc: 
Wesley Coopersmith, Chief of Staff, Office of the Administrator 
 
Thomas Kimsey, Associate Administrator, Office of Capital Access 
 
John Miller, Deputy Associate Administrator, Office of Capital Access 
 
Dianna Seaborn, Deputy Associate Administrator, Office of Capital Access 
Douglas Robertson, Acting Chief Information Officer, Office of the Chief Information  
Officer 
 
Nathan Davis, Chief Financial Officer and Chief Risk Officer, Office of Performance, 
Planning, and the Chief Financial Officer 
Deborah Chen, Deputy Chief Financial Officer, Office of Performance, Planning, and the 
Chief Financial Officer 
 
James Stallings, Associate Administrator, Office of Disaster Recovery and Resilience 
 
Rafaela Monchek, Deputy Associate Administrator, Office of Disaster Recovery and 
Resilience 
Wendell Davis, General Counsel, Office of General Counsel 
John Klein, Deputy General Counsel, Office of General Counsel 
 
Michael Simmons, Attorney Advisor, Office of General Counsel 

 
1 
Background 
The Office of Inspector General (OIG) issued a white paper1 in June 2023 that provided a 
comprehensive estimate of the potential fraud in the U.S. Small Business Administration’s (SBA) 
Coronavirus Disease 2019 (COVID-19) pandemic assistance loan programs. 
Over the course of the COVID-19 pandemic, SBA disbursed approximately $1.2 trillion of  
COVID-19 Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) funds. 
The economic assistance was intended to help eligible small business owners and entrepreneurs 
adversely affected by the crisis. 
A weak internal control environment can make programs vulnerable to fraud. In OIG’s white 
paper COVID-19 Pandemic EIDL and PPP Loan Fraud Landscape, we estimated SBA disbursed 
more than $200 billion in potentially fraudulent loans through COVID-19 relief programs. To 
establish this estimate, OIG used investigative casework, prior OIG reporting, and advanced data 
analytics to identify multiple schemes used by fraudsters to steal from the American taxpayer 
and exploit programs meant to help those in need. We believe loans identified as potentially 
fraudulent as part of our review warrant investigation by OIG and its investigative partners. 
While fraudulent payments are considered improper, not all improper payments are the result of 
fraud. 
Since the COVID-19 pandemic was declared a national emergency in March 2020 through the 
issuance of OIG’s fraud landscape report in June 2023, OIG issued 77 pandemic-related 
recommendations to SBA. Of the 77 recommendations, the agency had taken corrective actions 
to close 38 of them and 39 recommendations remained open as of June 2023. SBA has been 
working on implementing the corrective actions necessary to close the open recommendations. 
Below is a status update regarding SBA’s progress on implementing the 39 recommendations 
that remained open as of June 2023. 
 
 
 
1 SBA OIG, 23-09, COVID-19 Pandemic EIDL and PPP Loan Fraud Landscape (June 27, 2023). 

 
2 
Summary of Results 
As of December 31, 2024, SBA has closed 24 of the 39 pandemic-related recommendations that 
remained open as of June 2023. The status of open recommendations is subject to change as 
SBA continues its efforts to implement them, and we review those efforts. Therefore, some 
recommendations identified as open in this report may have subsequently been closed. 
SBA has not yet implemented 15 of the 39 recommendations. Specifically: 
• 2 recommendations remain unresolved because OIG and SBA have not reached an 
agreement on the agency’s planned actions for those recommendations (see Table 1); 
• 3 recommendations have exceeded their targeted implementation date (see Table 2); and, 
• 10 recommendations have not yet reached their target implementation date (see Table 3). 
Table 1: Unresolved Pandemic-Related Recommendations Made to SBA 
Recommendation 
OIG 
Report 
Number 
Implementation 
Date 
SBA Action(s) 
Evaluate whether the 
contract costs for web 
development services and 
media services are 
reasonable and remedy 
any violations. 
22-07 
07/12/2024 
This recommendation is under review by 
SBA’s Audit Follow-Up Official for 
resolution. SBA provided supporting 
documentation for its evaluation of media 
services costs but not for web development 
services costs. To close the 
recommendation, SBA should provide 
supporting documentation for its 
evaluation of $13.3 million paid for web 
development services and remedy any 
violations, as appropriate. 

 
3 
Recover the $100,000 
paid for unallowable pre-
award project 
management expenses. 
22-07 
07/12/2024 
This recommendation is under review by 
SBA’s Audit Follow-Up Official for 
resolution. SBA stated it cannot recover the 
costs based on the services provided but 
did not provide legal basis for its position. 
To close the recommendation, SBA should 
recover the $100,000 paid for pre-award 
expenses since the grant recipient did not 
provide sufficient evidence to support the 
costs claimed. 
Source: SBA Integrity System 
Table 2: Recommendations That Have Exceeded Targeted Implementation Date 
Recommendation 
OIG 
Report 
Number 
Implementation 
Date 
SBA Action(s) 
Review the loans identified as 
potentially ineligible to determine if 
the businesses met eligibility 
requirements. If not, take appropriate 
action related to loan guaranty and 
forgiveness. 
21-07 
11/01/2024 
SBA submitted a closure 
request with the results of its 
loan review. OIG verified the 
closure information and 
subsequently closed this 
recommendation on 
03/06/2025. 
Communicate and enforce the SBA 
System Development Methodology 
(SDM) in which a traceability matrix is 
used to ensure that system 
requirements can be tested and 
demonstrated in the operational 
system. Ensure all requirements are 
aligned with the contractual 
acceptance criteria. 
22-19 
12/30/2024 
(extension 
subsequently 
granted to 
03/31/2025) 
SBA stated it is currently 
drafting the System 
Development Methodology 
SOP to address the 
recommendation. 

 
4 
Explore alternative means of 
collections for PPP loans with an 
outstanding balance of $100,000 or 
less. 
22-25 
12/27/2024 
SBA requested an extension 
and stated it is preparing to 
submit an updated closure 
request package to OIG. OIG 
subsequently closed this 
recommendation on 
02/12/2025. 
Source: SBA Integrity System 
Table 3: Recommendations that Have Not Reached Their Target Implementation Date 
Recommendation 
OIG 
Report 
Number 
Implementation 
Date 
SBA Action(s) 
Review the OIG identified potential 
duplicate disbursements for eligibility 
and take action to recover any improper 
payments as applicable. 
21-09 
05/29/2025 
SBA stated it is reviewing 
the identified loans and 
taking corrective actions to 
address this 
recommendation. 
Review the applications of sole 
proprietors and independent 
contractors that included numbers of 
employees but no Employer 
Identification Number; and remedy the 
$3.5 billion disbursed to sole 
proprietors and $1 billion disbursed to 
independent contractors that exceeded 
the amount allowed by SBA’s policy. 
22-01 
02/28/2025 
(extension 
subsequently 
granted to 
04/30/2025) 
SBA stated it is taking 
corrective actions to address 
this recommendation to 
include updating related 
processes and procedures. 
Thoroughly review each COVID-19 EIDL 
grant and advance application 
submitted from foreign IP addresses 
that were approved and funded and 
verify eligibility. If ineligibility or 
evidence of potential fraud is found, 
SBA should stop any further or future 
disbursements, recover any disbursed 
funds, and refer fraudulent loans to OIG 
for investigation. 
22-17 
01/31/2025 
SBA has submitted a closure 
request for this 
recommendation and OIG 
subsequently closed this 
recommendation on 
01/13/2025. 

 
5 
Ensure the existing SBA SDM is updated 
to include supply chain risk-
management practices as required by 
Office of Management and Budget 
(OMB) Circular A-130 and high-value 
asset system designation guidance. 
Also, ensure high-value asset system 
risks are incorporated into the 
enterprise risk management framework, 
as recommended by OMB M-19-03 and 
SBA Standard Operating Procedure 
(SOP) 90 47 6. 
22-19 
12/31/2024 
(extension 
subsequently 
granted to 
03/31/2025) 
SBA stated it is currently 
drafting the System 
Development Methodology 
SOP to address the 
recommendation. 
In conjunction with the Enterprise Risk 
Management Board, implement 
enterprise-wide privacy risk mitigation 
practices that can be assimilated into 
new and existing system program 
designs. 
22-19 
01/20/2025 
(extension 
subsequently 
granted to 
08/01/2025) 
SBA stated it is updating its 
standard operations 
procedures to include 
enterprise-wide privacy risk 
mitigation practices. 
Transition information systems and 
common controls to an ongoing 
authorization process (when eligible for 
such a process) with the formal 
approval of the respective authorizing 
officials or reauthorize information 
systems and common controls as 
needed, on a time or event-driven basis 
in accordance with agency risk 
tolerance, as required by OMB Circular 
No. A-130 and SOP 90 47 6. 
22-19 
02/14/2025 
(extension 
subsequently 
granted to 
06/30/2025) 
SBA stated it is procuring a 
new tool to address the 
recommendation. Once 
procured, SBA will install the 
tool and train employees on 
its use. 
Review and update plans of action and 
milestones at least quarterly as required 
by SOP 90 47 6. 
22-19 
02/14/2025 
(extension 
subsequently 
granted to 
06/30/2025) 
SBA stated it is procuring a 
new tool to address the plan 
of actions and milestones 
using a monitoring tool 
platform. 

 
6 
Implement an automated process to 
document and monitor system changes 
as recommended by National Institute 
of Standards and Technology Special 
Publication 800-53 Rev. 5. 
22-19 
02/14/2025 
(extension 
subsequently 
granted to 
06/30/2025) 
SBA stated it is procuring a 
new tool to address the 
recommendation. Once 
procured, SBA will install the 
tool and train employees on 
its use. 
Review the 179 PPP loans, totaling 
approximately $684 million, for 
compliance with affiliation and size 
standards to ensure eligibility 
requirements were met and seek 
remedy or repayment for all loans 
deemed ineligible. 
22-21 
05/30/2025 
SBA stated it is currently 
reviewing the loans 
identified in this 
recommendation. 
Conduct an initial and periodic cost 
benefit analysis on PPP purchase 
guarantees with comprehensive 
estimates to sufficiently assess whether 
the cost of collecting loans of $100,000 
or less is more than the recovery 
amount and pursue collections based 
on results of the analysis. 
22-25 
01/31/2025 
SBA stated it is preparing to 
submit an updated closure 
request package to OIG. SBA 
subsequently submitted a 
closure request and OIG 
closed this recommendation 
on 03/26/2025. 
Source: SBA Integrity System 
Scope and Methodology 
This report presents the results of our review of open recommendations from prior OIG 
pandemic-related reports as of December 31, 2024. The scope of this review was limited to the 
39 open recommendations referred to in our white paper COVID-19 Pandemic EIDL and PPP 
Loan Fraud Landscape (Report 23-09). OIG conducted this review in response to congressional 
interest in obtaining updates on progress made by SBA on remaining open recommendations. 
To meet this requirement, we reviewed audit follow-up data and communications in SBA’s 
Integrity system to gain an understanding of the status of the 39 recommendations. We also 
relied on SBA’s Agency Financial Report, Fiscal Year 2024, to obtain SBA’s final action on 
outstanding audit recommendations. We determined whether recommendations were open or 
closed and the progress made on open recommendations. 

 
7 
We conducted this review in accordance with OIG’s policies and procedures and the Council of 
the Inspectors General on Integrity and Efficiency’s Quality Standards for Federal Offices of 
Inspector General, which requires that we conduct our work with integrity, objectivity, and 
independence. 
Use of Computer-Processed Data 
We relied on data from SBA’s electronic enterprise system, SBA Integrity System, to gain insight 
into the status of the recommendations for reporting purposes. This system is used jointly by 
SBA and OIG to store information, communication, and the statuses of all OIG recommendations. 
We believe that the data obtained from the system is sufficiently reliable to support our results.

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