Newsroom

Following Tuesday's hearing with Treasury Secretary Steven Mnuchin, the House Select Subcommittee on the Coronavirus Pandemic released a preliminary analysis of the paycheck protection program (PPP), which found that "billions of dollars in PPP loans may have been diverted to fraud, waste, and abuse."

Administered by the Small Business Administration (SBA) in coordination with the Treasury Department, the PPP was created by the CARES Act and launched with $349 billion in funding April 3. After depleting initial funding less than two weeks after applications opened, Congress provided another $320 billion for the program, with several NAFCU-sought set asides for smaller lenders such as credit unions and Community Development Financial institutions.

The program's authorization expired Aug. 8 with roughly $134 billion in funds still remaining. Congress is currently considering ways to continue and improve the program, including by allowing certain borrowers to take out a second PPP loan and simplifying the forgiveness process, which could be included in a Phase 4 coronavirus relief package.

In addition to citing issues with data and companies that received loans, the subcommittee's report also recommended that the SBA and Treasury:

• improve internal controls for loan forgiveness;
• improve the audit plan for PPP borrowers; and
• cooperate with oversight from Congress, inspectors general, and other watchdogs.

Subcommittee Chairman Jim Clyburn, D-S.C., sent a letter to the inspectors general of the SBA and Treasury calling for a review of the agencies' management of the PPP as a result of the report.

During Tuesday's hearing, Mnuchin indicated support for streamlining the forgiveness process for PPP loans – for which NAFCU continues to advocate – and the possibility of additional PPP loans to hardest hit industries. As several lawmakers raised concerns about fraud in the program, Mnuchin also said all loans over $2 million will be audited individually; loans under $2 million can be subject to audits, too.

In June, the Government Accountability Office released a report to Congress that outlined ways to improve the PPP.

NAFCU has consistently advocated for credit unions' ability to lend effectively through the program and has worked with the SBA and Treasury to obtain additional guidance and relief for lenders through the application and loan forgiveness processes. Access NAFCU's regularly update FAQs on PPP.