Fraud reports rise as banks dole out PPP loans, report finds
In July thousands of business loan fraud reports were filed, study shows
Reports of possible instances of business loan fraud rose over the summer as banks doled out hundreds of billions of dollars’ worth of Paycheck Protection Program loans, according to a new study.
The Project on Government Oversight, which analyzed previously unreported government data, noted an “abnormally high” number of suspected business loan fraud reports filed with the Treasury Department’s Financial Crimes Enforcement Network in July.
For the month, there were 1,044 reports filed, according to the group, which is about seven times previous monthly averages.
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The number of fraud reports in June was 489.
The reports are an indication that there could be suspicious activity involved – not a definite declaration of fraud.
While it was not clear that all of the instances were related to loans administered through the Paycheck Protection Program, researchers noted the spike in suspicious activity reports coincided with the timeframe under which banks were administering the funds.
The window to apply for a PPP loan opened in April and expired in August.
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The Department of Justice announced charges last week against more than 50 people who have been accused of trying to steal more than $175 million from the program.
According to the Small Business Administration, as of August more than 5.2 million loans were approved through the relief program, equal to more than $525 billion. The average loan size was $100,729.
The SBA also issued hundreds of billions of dollars’ worth of relief loans through its Economic Injury Disaster Loan program.
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Lawmakers have proposed legislation that would afford some small businesses the opportunity to apply for a second loan – but so far Republicans and Democrats have been unable to reach an agreement on a broader stimulus package.