Senator Joni Ernst is taking aim at the alarming rise in defaults on COVID-era loans, particularly the Paycheck Protection Program (PPP). Based on a communication from the Inspector General for Pandemic Recovery (SIGPR), Brian Miller, reported losses have reached $1.27 billion as of November 2024, a figure that has dramatically increased since repayment obligations began in July 2023. Miller stressed the crucial role of the SIGPR in safeguarding taxpayer dollars and preventing further escalation of this financial crisis. He also highlighted a concerning trend of borrowers defaulting on even the interest payments for the Main Street Lending Program (MSLP) and the Direct Loan Program.
With the SIGPR facing staff reductions and potential shutdown, Senator Ernst voiced concerns that approximately 130 identified potential defendants linked to loan fraud might evade investigation. She estimates potential losses from fraudulent COVID-19 relief programs could reach $200 billion if legislative action isn't taken. Senator Ernst emphasized the need to hold those who exploited the pandemic for personal gain accountable, particularly given the nation's current debt level. She criticized individuals who took advantage of struggling small businesses during the pandemic to defraud government aid programs.
The "first come, first serve" basis of the Restaurant Revitalization Fund and PPP loans drew criticism for potentially excluding eligible businesses while enabling access for unqualified applicants, including reports of gang members and drug traffickers receiving funds. Instances of blatant fraud, such as using a Barbie doll photo for identification, further underscore the vulnerabilities in the system. To address these issues, Senator Ernst has introduced the Complete COVID Collections Act. This legislation aims to extend the SIGPR's authorization through 2030, broaden its oversight to encompass other SBA COVID-related initiatives, and ensure rigorous collection of loans under $100,000. The bill also mandates regular reports from the Department of Justice to Congress regarding pandemic-related program activities, including prosecutions, recovered funds, and referrals.
The bill has garnered bipartisan support, with several Republican senators joining as co-sponsors.
