COVID-19 Pandemic EIDL and PPP Loan Fraud Landscape Recommendations Update (SBA OIG White Paper, Report 25-10, March 31, 2025)
Summary
SBA Office of Inspector General Report 25-10, a white paper dated March 31, 2025 and addressed to SBA Administrator Kelly Loeffler, updates Congress on the 39 pandemic-related recommendations left open after OIG Report 23-09. The report restates OIG's estimate in that paper that more than $200 billion of the approximately $1.2 trillion SBA disbursed in COVID-19 EIDL and PPP funds went to loans OIG labels "potentially fraudulent." OIG says it had issued 77 pandemic-related recommendations by June 2023, and that as of December 31, 2024 SBA had closed 24 of the 39 still open then. Of the 15 not implemented, 2 are unresolved because OIG and SBA have not agreed on the planned action, 3 have passed their target dates and 10 have not yet reached them.
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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
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
409 Third St. SW, Washington, DC 20416 • (202) 205-6586 • Fax (202) 205-7382
Background
The Office of Inspector General (OIG) issued a white paper 1 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).
1
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
OIG
Implementation
Recommendation Report SBA Action(s)
Date
Number
Evaluate whether the 22-07 07/12/2024 This recommendation is under review by
contract costs for web SBA’s Audit Follow-Up Official for
development services and resolution. SBA provided supporting
media services are documentation for its evaluation of media
reasonable and remedy services costs but not for web development
any violations. 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.
2
Recover the $100,000 22-07 07/12/2024 This recommendation is under review by
paid for unallowable pre- SBA’s Audit Follow-Up Official for
award project resolution. SBA stated it cannot recover the
management expenses. 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
OIG
Implementation
Recommendation Report SBA Action(s)
Date
Number
Review the loans identified as 21-07 11/01/2024 SBA submitted a closure
potentially ineligible to determine if request with the results of its
the businesses met eligibility loan review. OIG verified the
requirements. If not, take appropriate closure information and
action related to loan guaranty and subsequently closed this
forgiveness. recommendation on
03/06/2025.
Communicate and enforce the SBA 22-19 12/30/2024 SBA stated it is currently
System Development Methodology (extension drafting the System
(SDM) in which a traceability matrix is subsequently Development Methodology
used to ensure that system granted to SOP to address the
requirements can be tested and 03/31/2025) recommendation.
demonstrated in the operational
system. Ensure all requirements are
aligned with the contractual
acceptance criteria.
3
Explore alternative means of 22-25 12/27/2024 SBA requested an extension
collections for PPP loans with an and stated it is preparing to
outstanding balance of $100,000 or submit an updated closure
less. 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
OIG
Implementation
Recommendation Report SBA Action(s)
Date
Number
Review the OIG identified potential 21-09 05/29/2025 SBA stated it is reviewing
duplicate disbursements for eligibility the identified loans and
and take action to recover any improper taking corrective actions to
payments as applicable. address this
recommendation.
Review the applications of sole 22-01 02/28/2025 SBA stated it is taking
proprietors and independent (extension corrective actions to address
contractors that included numbers of subsequently this recommendation to
employees but no Employer granted to include updating related
Identification Number; and remedy the 04/30/2025) processes and procedures.
$3.5 billion disbursed to sole
proprietors and $1 billion disbursed to
independent contractors that exceeded
the amount allowed by SBA’s policy.
Thoroughly review each COVID-19 EIDL 22-17 01/31/2025 SBA has submitted a closure
grant and advance application request for this
submitted from foreign IP addresses recommendation and OIG
that were approved and funded and subsequently closed this
verify eligibility. If ineligibility or recommendation on
evidence of potential fraud is found, 01/13/2025.
SBA should stop any further or future
disbursements, recover any disbursed
funds, and refer fraudulent loans to OIG
for investigation.
4
Ensure the existing SBA SDM is updated 22-19 12/31/2024 SBA stated it is currently
to include supply chain risk- (extension drafting the System
management practices as required by subsequently Development Methodology
Office of Management and Budget granted to SOP to address the
(OMB) Circular A-130 and high-value 03/31/2025) recommendation.
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.
In conjunction with the Enterprise Risk 22-19 01/20/2025 SBA stated it is updating its
Management Board, implement (extension standard operations
enterprise-wide privacy risk mitigation subsequently procedures to include
practices that can be assimilated into granted to enterprise-wide privacy risk
new and existing system program 08/01/2025) mitigation practices.
designs.
Transition information systems and 22-19 02/14/2025 SBA stated it is procuring a
common controls to an ongoing (extension new tool to address the
authorization process (when eligible for subsequently recommendation. Once
such a process) with the formal granted to procured, SBA will install the
approval of the respective authorizing 06/30/2025) tool and train employees on
officials or reauthorize information its use.
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.
Review and update plans of action and 22-19 02/14/2025 SBA stated it is procuring a
milestones at least quarterly as required (extension new tool to address the plan
by SOP 90 47 6. subsequently of actions and milestones
granted to using a monitoring tool
06/30/2025) platform.
5
Implement an automated process to 22-19 02/14/2025 SBA stated it is procuring a
document and monitor system changes (extension new tool to address the
as recommended by National Institute subsequently recommendation. Once
of Standards and Technology Special granted to procured, SBA will install the
Publication 800-53 Rev. 5. 06/30/2025) tool and train employees on
its use.
Review the 179 PPP loans, totaling 22-21 05/30/2025 SBA stated it is currently
approximately $684 million, for reviewing the loans
compliance with affiliation and size identified in this
standards to ensure eligibility recommendation.
requirements were met and seek
remedy or repayment for all loans
deemed ineligible.
Conduct an initial and periodic cost 22-25 01/31/2025 SBA stated it is preparing to
benefit analysis on PPP purchase submit an updated closure
guarantees with comprehensive request package to OIG. SBA
estimates to sufficiently assess whether subsequently submitted a
the cost of collecting loans of $100,000 closure request and OIG
or less is more than the recovery closed this recommendation
amount and pursue collections based on 03/26/2025.
on results of the analysis.
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.
6
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.
7
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