SBA OIG: Top Management and Performance Challenges Facing the Small Business Administration in Fiscal Year 2024

Identification of an issue as a top challenge does not necessarily denote significant deficiencies or lack of attention on SBA’s part. Many of the top management challenges are longstanding, inherently difficult, and will likely continue to be challenges in the coming years. Addressing the challenges will require consistent attention from agency management and ongoing engagement with Congress, the public, and other stakeholders…

Challenge 1: SBA’s Economic Relief Programs Are Susceptible to Significant Fraud Risks and Vulnerabilities Why This Is a Challenge In the wake of the Coronavirus Disease 2019 (COVID-19) pandemic, action was needed to avert an economic crisis caused by lockdowns, business closures, and other economic impediments. More than 30 million small businesses in the United States were adversely affected by the economic crisis. In March 2020 the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted, authorizing the U.S. Small Business Administration (SBA) to administer an unprecedented amount of funds through the Paycheck Protection Program (PPP) and COVID-19 Economic Injury Disaster Loan (EIDL) program. These funds were intended to help eligible small business owners and entrepreneurs adversely affected by the economic crisis. Executive and legislative actions intended to expedite aid during the crisis led SBA to reduce or eliminate key internal controls that could have helped to mitigate fraud and misuse of taxpayer funds. The agency also relied on a mandated self-certification of eligibility for PPP loans to expedite aid. We have determined the agency has made progress in strengthening internal controls, but several issues remain open, which we highlight in this report, and should be considered for future economic relief programs like the PPP and COVID-19 EIDL…