The House of Representatives Select Subcommittee on the Coronavirus Crisis has released a report critical of some financial technology companies (fintechs) in administering the Paycheck Protection Program (PPP).
U.S. Rep. James E. Clyburn (D-SC), chairman of the Select Subcommittee, recently issued the report detailing what the panel deemed poor performance of many fintechs, citing how the entities in question investigated companies while being responsible for processing PPP applications and recklessly screening those with signs of fraud.
In May 2021, the Select Subcommittee began an investigation into the role of fintech companies Kabbage, Inc., Bluevine, and partner banks Cross River Bank and Celtic Bank in facilitating PPP fraud in the wake of public reports alleging they were linked to disproportionate numbers of fraudulent loans.
Additionally, the report reflected the investigation was expanded in November 2021 to include fintech start-ups Blueacorn PPP, LLC, and Womply, Inc., after it was determined significant percentages of PPP loans facilitated by the companies had indicators of fraud, resulting in the approval of large numbers of fraudulent applications.
“Many fintechs, while promising to help disburse billions of Paycheck Protection Program dollars to struggling small businesses efficiently and expeditiously, refused to take adequate steps to detect and prevent fraud despite their clear responsibility to safeguard taxpayer funds,” Clyburn noted via a statement. “Even as these companies failed in their administration of the program, they nonetheless accrued massive profits from program administration fees, much of which was pocketed by the companies’ owners and executives. On top of the windfall obtained by enabling others to engage in PPP fraud, some of these individuals may have augmented their ill-gotten gains by engaging in PPP fraud themselves.”
The report includes 11 recommendations addressing PPP fraud and offers improvements for future programs.