Federal COVID Relief for Small Businesses Arrived Quickly, But With Risks to Loan Programs

Pandemic Relief Loans

Employ Milwaukee has been serving Milwaukee County for well over 30 years. With help from a PPP loan, the organization was able to keep their entire staff on the payroll with the tools needed to work safely from home; offer remote training and counseling to hundreds of job seekers; initiate a drive-thru job fair; and place 500 youth in summer jobs. Small Business Administration (SBA), has been a major response to provide economic relief during COVID-19.

Check out our reports issued in July (EIDL and PPP), and listen to our podcast with GAO’s small business program expert Bill Shear. That’s the percentage of the $1.2 trillion doled out by the SBA that may have been lost to fraud, waste and other abuses, according to the report. WALKER and LEVY are also charged with a single count of aggravated identity theft, which carries a mandatory two-year consecutive sentence.

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Justice Department Inspector General Michael Horowitz, who oversees Covid relief spending, told “NBC Nightly News” anchor Lester Holt in an exclusive interview that Covid relief programs were structured in ways that made them ripe for plunder. Nonprofit credit counselors will talk to you at no charge, review your financial situation and help strategize solutions. Counselors with agencies certified by the National Federation of Credit Counseling are required by law to act in your best interest – they won’t try to sell you a product.

The ARP extended the Employee Retention Credit and Paid Leave Credit to small businesses through 2021. The ERC allowed businesses to offset their 2021 payroll tax liabilities by up to $7,000 per employee per quarter until December 2021. It was available to small businesses that lost revenue because of COVID-19. The PLC was a tax credit for small and midsize businesses that offered paid leave to employees who were out of work because of illness, quarantine or caregiving, up to $5,000, through September 2021. Businesses who used them should have claimed them when filing taxes in 2022.

Latest Programs and Updates

Visit the California Coronavirus (COVID-19) Response website for information about the state’s response to the pandemic. The COVID-19 public health crisis and resulting economic crisis have created a variety of challenges for small, micro, and solo businesses in communities across the country. The Treasury Department is providing critical assistance to small businesses across the country, facilitating the urgent deployment of capital and support to help these organizations not just persevere, but recover on solid footing. Payments on loans have been suspended until the Court’s decision; those payments will restart 60 days after a decision is announced. However, if the debt relief program has not been implemented and litigation has not been resolved by June 30, 2023, payment will start 60 days later.

  • Ready to start analyzing the latest State and Local Fiscal Recovery Fund (SLFRF) data?
  • The only requirement is that you must spend the advance only for the expenses listed above.
  • Government programs allow for forgiveness up to certain amounts for COVID-19-related loans if borrowers meet certain requirements.
  • For additional program information, please visit the agency’s website or contact your local government.
  • In another Florida case, prosecutors have charged a man who they say used proceeds from a $7.2 million emergency loan to buy a 12,579-square-foot mansion, a Lincoln Navigator car, a Maserati and a Mercedes-Benz.

Your loan must be current or no more than 30 days delinquent to qualify. You are eligible to use the new Form 3508S if your PPP loan totaled $150,000 or less; however, if the SBA’s affiliation rules apply and you and your affiliates together received loans totaling $2 million or more, you cannot use Form 3508S. Because the entire PPP loan is subject to forgiveness, the rules are different for this program.

Paycheck Protection Program for Small Businesses

A record 16.3 million people signed up for health care coverage for 2023, buying plans set up by the Affordable Care Act. Sign-ups on healthcare.gov have increased by almost 50% since Biden became president. The increases are due in large part to the benefits offered as part of the ARP.

What is the EIDL loan used for?

The COVID-19 Economic Injury Disaster Loan (EIDL) and EIDL Advance programs provide funding to help small businesses recover from the economic impacts of the COVID-19 pandemic. There are two types of COVID-19 EIDL funding: COVID-19 EIDL loan funds may be used for working capital and other normal operating expenses.

“It means you should investigate further, because sometimes it’s a gun, but other times it’s a big buckle on your belt.” They also say there’s a large gap between the Inspector General’s estimate of the size of potential fraud, versus the SBA’s estimated amount of likely fraud, once cases have been looked at more closely. The OIG says the $200 billion estimate is the result, in part, of “advanced data analytics” of SBA data on the pandemic cash disbursements. A woman walks past a personal finance loan office in October 2020 in Franklin, Tenn. “Misrepresentation of eligibility is unlawful, and, when appropriate, these cases are referred to the Office of the Inspector General,” it said. The case of the California couple pursued by the SBA inspector general appears to illustrate that fraudsters were leveraging the apparent incuriosity of those doling out the cash.

Government death benefits

Washington, D.C., resident Elias Eldabbagh, who appears to have no criminal record, was charged last summer with trying to steal $17 million from PPP and another program. According to his LinkedIn page, he earned a degree in computer engineering from California State University, Sacramento, and has worked in various technology jobs. “I have a hard time imagining when so much money has gone so quickly into the hands of people who don’t deserve it,” he added. The prevalence of Covid relief fraud has been known for some time, but the enormous scope and its disturbing implications are only now becoming clear.

How is the EIDL loan amount calculated?

Gross Profit ÷ 2 = maximum loan amount You Gross Profit is Annual Revenues less Cost of Goods Sold.

Brighter Beginnings has been serving resource-poor neighborhoods in the San Francisco Bay Area community for over 35 years. Its mission is to support healthy births and successful development of children by partnering with parents and helping to build strong communities. Currently the organization offers services at four East Bay locations. “Kudos to Self Help – you have given me back a sense of hope for our community and how banking relationships can also be personal and driven by a community vision of capital for all,” said Barbara McCullough, CEO. My Block My Hood My City (aka M3) is here to start the conversations that cultivate a deeper connection to our communities and the people within them in order to ensure everyone has what they need to succeed. With help from a PPP loan, the entire staff was able to stay on with full pay, serving and supporting approximately 20,000 people over the last 18 months.

And another $80 billion potentially pilfered from a separate Covid disaster relief program. The CAA, 2021 made even more changes, including the creation of two tiers of PPP loans, First Draw and Second Draw. Passage of the PPP Extension Act gives applicants until May 31, 2021, to apply for a PPP loan, gives lenders until June 30, 2021, to process those applications, and extends the covered period for all PPP loans to June 30, 2021. If you need more time to recover financially, you can request an extension. Some loans may be eligible for up to 18 months of forbearance, depending on when your initial forbearance started.

Pandemic Relief Loans

Across the country, only 178 people have been convicted so far in PPP fraud cases, according to the Justice Department. Many more prosecutions are coming, but even if the numbers reach 2,000 — or 20,000 — it will be only a small fraction of the fraud. A California couple were convicted in June of stealing $18 million, with which they bought three houses, diamonds, gold coins, luxury watches, expensive furniture and other valuables, prosecutors said.

Assistance for Small Businesses

The American Rescue Plan extends a number of critical tax benefits, particularly the Employee Retention Credit and Paid Leave Credit, to small businesses. “There is something to that argument, especially when it’s applied to the very early weeks of https://www.bookstime.com/blog/pandemic-relief-loans the program,” says Sam Kruger, an assistant professor of finance at the University of Texas who has studied pandemic fraud. But he says the data analysis behind this new report shows the government did have the ability to tighten up the system.