U.S. Rep. Roger Williams (R-TX), chair of the House Committee on Small Business, said his committee’s year and a half long investigation into the U.S. Small Business Administration found the agency had obstructed Congressional oversight.
The committee had been investigating the agency after it decided to end collection on nearly 25% of its COVID-19 lending portfolio. Committee staff released a report Monday that alleged the SBA obstructed Congressional oversight, slowed the production of documentation and ignored legitimate oversight requests.
“The SBA’s decision to end active collection on billions of pandemic loans proved to be a disaster for the taxpayers,” Williams said. “Rather than do the work necessary to collect on these pandemic loans, the SBA decided it would be too inconvenient to do their jobs and let them sit in limbo as their collectability deteriorated. While we are happy that pressure from the Committee to reverse this decision was successful, we will never know how much money was lost because of this dereliction of duty.”
According to committee staff, the SBA had come under investigation after it decided to end collecting delinquent pandemic loans valued at $100,00 or less. Staff said that throughout the COVID-19 lending programs, the SBA was stretched thin as they serviced its pandemic lending portfolio while attempting to recoup the $200 billion in potential fraud associated with those programs.
Staff members said that throughout the investigation, the SBA said that recovery of those loans would be “nearly zero” even if they were to use all available measure to pursue them. Staffers said the SBA failed to provide convincing arguments to justify its decision to end collection to either the SBA’s Office of Inspector General (OIG) or to the committee. While the SBA eventually bolstered their cost benefit analysis for the Paycheck Protection Program (PPP), staffers said, it never provided an adequate cost-benefit analysis on its decision to end collection and abandon collateral COVID-19 specific Economic Injury Disaster Loans valued at $100,000 or less.
According to the committee, the SBA reversed this decision and said it intended to begin referring these loans Treasury for offset and cross servicing. The action brings SBA back in line with the Debt Collection Improvement Act, staffers said. But the agency’s actions were still concerning, the report found.
“Throughout this investigation, the SBA repeatedly slow rolled productions, ignored the Committee’s requests for documents, and took months to make staff available for transcribed interviews. Unfortunately, despite repeated discussions, letters, and threatening a subpoena, the SBA’s lack of cooperation forced the Committee to finally issue a subpoena for documents on June 5, 2024, to be able to conduct its constitutionally mandated oversight,” staffers wrote.