SBA Information Notice: Guidance Regarding Identification and Reporting of Suspicious Activity in the COVID-19 EIDL Loan Program
Summary
SBA Information Notice, Control No. 5000-20037, effective July 22, 2020, to depository financial institutions and all SBA employees, giving guidance on identifying and reporting suspicious activity in the COVID-19 EIDL loan program. It gives an overview of COVID-19 assistance under SBA's Economic Injury Disaster Loan (EIDL) Program, including advances (grants) and direct loans, administered by SBA's Office of Disaster Assistance. It alerts depository institutions to the potential for suspicious activity involving COVID-19 EIDL funds deposited into business or personal accounts and gives SBA points of contact for reporting it.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
SBA Information Notice
TO: Depository Financial Institutions and All CONTROL NO.: 5000-20037
SBA Employees
EFFECTIVE: July 22, 2020
SUBJECT: Guidance Regarding Identification and
Reporting of Suspicious Activity in the COVID-19
EIDL Loan Program
The purpose of this Notice is to provide a brief overview of COVID-19 assistance available
under SBA’s Economic Injury Disaster Loan (EIDL) Program, including both advances (grants)
and direct loans, and to alert depository financial institutions to the potential for suspicious
activity related to COVID-19 EIDL funds deposited into business or personal accounts. This
Notice also provides points of contact at SBA for depository financial institutions to report
suspicious activity in the COVID-19 EIDL loan program.
The SBA EIDL direct loan program, administered by SBA’s Office of Disaster Assistance
(ODA), offers long-term, low-interest loans to eligible small businesses, private non-profit
organizations, and agricultural businesses that have suffered substantial economic injury as a
result of a declared disaster. SBA has issued COVID-19 disaster declarations for all U.S. states
and territories. Eligible applicants must apply directly to SBA using the online SBA COVID-19
EIDL portal (available at https://www.sba.gov/funding-programs/disaster-
assistance/coronavirus-covid-19). For the COVID-19 disaster, Section 1110 of the Coronavirus
Aid, Relief, and Economic Security Act (CARES Act) (P.L. 116-136) authorized SBA to provide
advances of up to $10,000 to applicants that applied for COVID-19 EIDL loans and self-certified
as to eligibility, while the applicants await processing of their EIDL loan applications. The
COVID-19 EIDL advance is a grant that must be used for general business purposes.
When SBA disburses an EIDL advance or an EIDL loan to an applicant or borrower, all
proceeds are deposited ONLY into the verified Financial Institution account belonging to the
eligible applicant or borrower. For purposes of the EIDL program, a verified Financial
Institution account is a depository institution account using the Employer Identification Number
(EIN) or Social Security Number (SSN) entered by the applicant or borrower in the EIDL loan
application. No third-party service provider is authorized by SBA to receive EIDL advance or
EIDL loan funds on behalf of an applicant or borrower.
PAGE 1 of 3 EXPIRES: 7-1-21
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
SBA has become aware of certain suspicious activity associated with the COVID-19 EIDL loan
program. SBA is requesting the assistance of depository financial institutions in identifying and
reporting suspicious activity to SBA as well as to other appropriate regulatory agencies.
Examples of COVID-19 EIDL suspicious activity include, but are not limited to, the following:
➢ Use of stolen identities or EIN or SSN numbers to qualify for the EIDL advance or
EIDL loan.
➢ Purported businesses, including front or shell companies, lacking indicia of operating
presence or history, receiving EIDL advances or EIDL loans.
➢ Applicants working with third parties to obtain EIDL advances or EIDL loans in
exchange for keeping a percentage of the funds.
➢ Account holders that are victims of social engineering schemes and may not know
that the source of the funds is an EIDL advance or EIDL loan.
➢ A customer advises a financial institution that the customer received a COVID-19
EIDL ACH deposit from “SBAD TREAS 310” and “Origin No. 10103615” into their
account, but did not apply for a COVID-19 EIDL loan.
➢ A customer receives a COVID-19 EIDL ACH deposit after the financial institution
previously denied the customer’s Paycheck Protection Program (PPP) loan
application, particularly where the financial institution identified inaccurate or
incomplete information in the customer’s PPP loan application.
Additionally, depository financial institutions are encouraged to examine the following
transactions more closely to determine if they constitute COVID-19 EIDL suspicious activity:
➢ A customer not known to be a small business, sole proprietor, or independent
contractor receives a lump sum COVID-19 EIDL ACH deposit from “SBAD TREAS
310” and “Origin No. 10103615” into a personal account.
➢ A new customer opens an account and shortly thereafter receives a COVID-19 EIDL
ACH lump sum deposit from “SBAD TREAS 310” and “Origin No. 10103615”.
➢ A single account receives multiple EIDL advance or multiple EIDL loan deposits.
Depository financial institutions are also directed to the COVID-19 webpage maintained by the
Financial Crimes Enforcement Network (FinCEN) at https://www.fincen.gov/coronavirus. This
webpage, which is updated on an ongoing basis, provides notices and advisories to depository
financial institutions regarding illicit financial activity related to COVID-19.
If a depository financial institution detects suspicious activity in a customer’s account relating to
COVID-19 EIDL advance or loan deposits, the institution should follow the protocols of the
institution’s compliance division and the institution’s state or federal regulator(s), including
filing a Suspicious Activity Report with FinCEN as appropriate. Additionally, SBA requests that
depository financial institutions report suspicious activity associated with the COVID-19 EIDL
loan program to SBA’s Office of Inspector General through one of the following methods:
Telephone: OIG Hotline at 1-800-767-0385
PAGE 2 of 3 EXPIRES: 7-1-21
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
Email: OIGHotline@sba.gov
Website: Complete the on-line OIG Complaint Submission Form at
https://www.sba.gov/office-of-inspector-general
The SBA point of contact for questions regarding suspicious activity associated with the
COVID-19 EIDL loan program is: eidl.ach.inquiries@sba.gov.
SBA appreciates the cooperation and diligence of depository financial institutions in identifying
and reporting suspicious activity associated with the COVID-19 EIDL loan program.
William M. Manger
Chief of Staff
PAGE 3 of 3 EXPIRES: 7-1-21
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
File and source
- File
- 2020-07_5000-20037-508.pdf
- Size
- 143,663 bytes
- SHA-256
- 160ec0a7230309ad242e2350862eb6588f33628ac87b9aaea980de0db1397e84
- Our copy
- 2020-07_5000-20037-508.pdf
- Original
- www.sba.gov