"Committee on Small Business Releases Staff Report on Investigation into the SBA’s Decision to End Collection on Nearly a Quarter of its COVID-19 Lending…

Summary

Press release dated November 4, 2024 stating that Congressman Roger Williams (TX-25), Chairman of the House Committee on Small Business, released a staff report on the Committee's investigation into the Small Business Administration's decision to end collection on nearly a quarter of its COVID-19 lending portfolio. The release says the decision concerned delinquent pandemic loans valued at $100,000 or less and that the SBA notified the Committee on December 28, 2023, of its intention to begin referring these loans to Treasury for offset and cross servicing. It also says the Committee issued a subpoena for documents on June 5, 2024.

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Committee on Small Business Releases Staff Report on Investigation into the SBA’s Decision to End Collection on Nearly a Quarter of its COVID-19 Lending Portfolio

November 4, 2024

WASHINGTON, D.C. – Today, Congressman Roger Williams (TX-25), Chairman of the House Committee on Small Business, released a staff report on the Committee’s year and a half long investigation into the U.S. Small Business Administration’s (SBA) decision to end collection on nearly a quarter of its COVID-19 lending portfolio. Throughout the investigation, the SBA repeatedly obstructed Congressional oversight, slow rolling document productions and ignoring legitimate oversight requests. Chairman Williams issued the following statement.

“The SBA’s decision to end active collection on billions of pandemic loans proved to be a disaster for the taxpayers,” said Chairman Williams. “Rather than do the work necessary to collect on these pandemic loans, the SBA decided it would be too inconvenient to do their jobs and let them sit in limbo as their collectability deteriorated. While we are happy that pressure from the Committee to reverse this decision was successful, we will never know how much money was lost because of this dereliction of duty.”

Read the full Staff Report here.

Background:

For 18 months, the House Committee on Small Business has been investigating the Biden-Harris Small Business Administration’s (SBA) decision to end collection on delinquent pandemic loans valued at $100,000 or less. Throughout the COVID-19 lending programs, the SBA was stretched incredibly thin as they began to service its pandemic lending portfolio while simultaneously attempting to recoup the reported $200 billion in potential fraud associated with those programs.

Throughout the investigation, the Committee heard repeatedly that the SBA’s estimated recovery of these loans would be “nearly zero” even if they were to use all available measures to pursue them. Despite these claims, the SBA failed to provide convincing arguments to justify the decision to end collection to either the SBA’s Office of Inspector General (OIG) or the Committee. While the SBA eventually bolstered their cost benefit analysis for the Paycheck Protection Program (PPP), it never provided an adequate cost-benefit analysis on the decision to end collection and abandon collateral on COVID-19 specific Economic Injury Disaster Loans (COVID EIDL) valued at $100,000 or less.

In the face of immense pressure from the Committee, the SBA reversed this decision and notified the Committee on December 28, 2023, of their intention to begin referring these loans to Treasury for offset and cross servicing. While the SBA reversing this policy brings the agency back in line with the Debt Collection Improvement Act, the poor decision-making and lack of accountability to the taxpayer is alarming.

Throughout this investigation, the SBA repeatedly slow rolled productions, ignored the Committee’s requests for documents, and took months to make staff available for transcribed interviews. Unfortunately, despite repeated discussions, letters, and threatening a subpoena, the SBA’s lack of cooperation forced the Committee to finally issue a subpoena for documents on June 5, 2024, to be able to conduct its constitutionally mandated oversight.

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