Senator Joni Ernst, chair of the Senate Committee on Small Business and Entrepreneurship, has called for greater accountability in response to widespread fraud in the Small Business Administration’s (SBA) COVID relief programs. Ernst urged Congress to pass her SBA Fraud Enforcement Extension Act before statutes of limitations expire, a move she says is necessary for investigators to continue pursuing those who misused relief funds.
Ernst stated that while pandemic relief initiatives such as the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) were vital for small businesses during the crisis, insufficient oversight led to an estimated $200 billion in fraudulent loans. She noted:
“Nearly six years ago, the Small Business Administration’s pandemic relief programs provided a much-needed lifeline for small businesses in Iowa and across America.
“Millions of small business owners and their employees were saved from closure and mass layoffs thanks to Paycheck Protection Program and Economic Injury Disaster Loan funds awarded by the SBA.
“But as we’ve seen time and again, when government funds seem ‘free’ for the taking, bad actors are ready to steal and scam.
“But government programs should never be able to be exploited at the American taxpayer’s expense in the first place.
“However, the lack of oversight mechanisms in SBA’s COVID relief programs, coupled with the quick disbursement of funds to save shuttered businesses, allowed swindlers to rob taxpayers of $200 billion in pandemic relief loans.
“The Pandemic Response Accountability Committee, or PRAC, sounded the alarm years ago on how allowing applicants to self-certify their eligibility increases fraud. Self-certification allows the government to rely on an applicant’s promise that they meet program requirements.
“The SBA Office of Inspector General repeatedly echoed their concernsabout this system.
“Unfortunately for taxpayers, the Biden administration ignored repeated watchdog warnings, allowing blanket forgiveness without additional verification on PPP loans under $150,000 and potentially allowing a large swath of fraud to escape meaningful scrutiny.
“Self-certification was known to be a major problem as more pandemic relief programs were created.
“Consider the Restaurant Revitalization Fund (RRF) and Shuttered Venue Operators Grant (SVOG) programs.
“These opened a menu of fraud for the taking.
“In 2024, music artist Chris Brown exploited these awards to the tune of $10 million.
“Half of these funds were paid directly to the singer himself.
“Additional funds were spent on an $80-thousand-dollar birthday party.
“The SBA never should have been running a drive-thru for fraudsters.
“However, even though the RRF program had a 20-location limit for franchisees, restaurant chain CoreLife Eatery – with 29 locations – still got served $7.8 million from taxpayers that it never should have been allowed to receive.
“But talk about fast fraud made to order, one Oregon dentist – known for illegally distributing pharmaceuticals – used his personal address and fictitious restaurant names in Florida to generate nearly $8 million in RRF payments.
“To date, PRAC has diligently helped law enforcement partners expose more than $2.4 billion in estimated fraud loss.
“IG Kirk’s recent appointment as PRAC Chair highlights how critical it remains to claw back these funds, especially across SBA programs.
“Last July, the SBA OIG flagged an astonishing $544 million of potential improper payments in the SVOG program, yet the Biden administration continued ignoring the problem. Ultimately, officials from the previous administration did not refer a single case to Treasury.
“Fraudsters can’t be left off the hook just because time has passed.
“Congress must pass my SBA Fraud Enforcement Extension Act to extend statutes of limitations for SVOG and RRF programs and give investigators time they need continue going after crooks.
“Without my legislation as soon as April fraudsters who stole funds will escape justice.
“You heard me right folks in a little over a month some of SBA’s COVID programs can no longer be prosecuted.
“The good news is my statute of limitations bill has already passed House and this Committee.
“It is now pending before full Senate.
“I call on Democrats stop blocking this legislation so there can be real accountability.
“I am grateful current administration knows job is not finished.
“SBA is conducting manual reviews more than 10 000 RRF awards totaling over $3 billion.
“Just over 1 000 these awardees did not submit required post-award report documenting how money was spent.
“SBA also sent demand letters additional 8 000 awardees who were not part manual review never submitted post-award report totaling over $1.2 billion RRF disbursements.
“Additionally last year SBA issued hundreds demand letters SVOG grant recipients total grant value recipients who have not responded totals over $150 million.
“SBA has been dealt incredibly difficult hand reviewing entirety both programs before statutes limitation end referring all fraud investigators This critical work must continue
“A few weeks ago Administrator Loeffler suspended more than 110 000 California borrowers who took home over $8.5 billion potentially fraudulent COVID relief funds
“The recent fraud investigations Minnesota have uncovered at least $9 billion state federal programs including $400 million PPP loans Administrator Loeffler acted quickly remedy issue
"Republican Members this Committee sent letter Administrator Loeffler earlier this month applauding her work shut down schemes
“I ask unanimous consent enter into record our January 8th letter requesting information from SBA its efforts uncover fraud SBA programs Without objection so ordered
"I look forward hearing our federal watchdog partners today how they are tackling fraud recovering taxpayers’ hard-earned dollars
"Thank you your service I look forward hearing your testimony.”
The Senate Small Business and Entrepreneurship Committee plays an important role by supporting informed decision-making related to national fiscal priorities [source]. The committee provides Congress with comprehensive policy options regarding federal budget components [source] and contributes through resolutions as well as reconciliation instructions [source]. Established by legislation enacted in 1974 [source], it also oversees nonpartisan budgetary analysis via supervision of Congressional Budget Office activities [source].
