Tuesday, October 4, 2022

SBA OIG Finds $684 million in PPP Loans to Potentially Ineligible Nonprofits; Grand Jury Indicts Nonprofit Leaders for Allegedly Fraudulent COVID Relief Loans

E0e199acd15b2c54a17de6be507cf7f7The Office of Inspector General (OIG) for the U.S. Small Business Administration (SBA) issued a review of Paycheck Protection Program (PPP) eligibility for nonprofit organizations. Here is its summary:

The U.S. Small Business Administration (SBA) Office of Inspector General (OIG) conducted this review to assess Paycheck Protection Program (PPP) eligibility for nonprofit organizations. Based on data analysis, we identified 179 PPP loans, totaling approximately $684 million, made to potentially ineligible nonprofits that may have exceeded SBA’s requirements for business size, known as size standards, at the time of application.

We also reviewed PPP loans for three large nonprofits, including Planned Parenthood of Illinois that received over $3.8 million, Goodwill of Southwestern Pennsylvania that received over $6 million, and YMCA of the Rockies that received over $3.5 million. OIG included a Planned Parenthood organization to address concerns from some members of the U.S. Senate Committee on Small Business and Entrepreneurship. We determined that the Planned Parenthood organization met PPP loan eligibility requirements. The Goodwill organization was not eligible for a PPP loan at the time of application but subsequently became eligible for forgiveness due to updated PPP guidance. The YMCA organization we reviewed did not meet eligibility requirements because they exceeded the applicable size standard of no more than 500 employees at the time of application and forgiveness.

We also reviewed the three national organizations associated with the PPP loans to the aforementioned Planned Parenthood, Goodwill, and YMCA for potential affiliation with the PPP loan recipients. We found no affiliation between the national organizations and the loan recipients.

We recommend SBA review the 179 PPP loans, totaling approximately $684 million, to ensure eligibility requirements were met and seek remedy or repayment for all loans deemed ineligible, and seek remedy or repayment of the PPP loan we reviewed for YMCA totaling $3.5 million. SBA management partially agreed with recommendation 1 and agreed with recommendation 2.

Separately, the Lexington Herald Leader reports that a federal grand jury has indicated two individuals associated with nonprofit entities, including a church, who allegedly fraudulently applied for more than $350,000 in coronavirus relief loans.

Lloyd Mayer

 

https://lawprofessors.typepad.com/nonprofit/2022/10/sba-oig-finds-684-million-in-ppp-loans-to-potentially-ineligible-nonprofits-grand-jury-indicts-nonpr.html

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