Evaluation of COVID-19 Economic Injury Disaster Loan Applicants on the U.S. Department of the Treasury’s Do Not Pay List

The OIG is issuing this evaluation to assess whether the U.S. Small Business Administration (SBA) effectively implemented internal controls when using the U.S. Department of the Treasury’s Do Not Pay (DNP) databases to detect and prevent payments of Coronavirus Disease 2019 (COVID-19) Economic Injury Disaster Loans (EIDL) and grants to ineligible entities. Despite implementing controls requiring loan officers to check DNP databases prior to approval of COVID-19 EIDLs and provide applicants 30 days to rectify any negative information received from DNP, the agency continued to award and disburse COVID-19 EIDL and grant funds to those listed in a DNP database without mitigating the negative information. We recommended the agency review the 3,643 potential improper payments we identified and determine if applicants can rectify the negative information; if not, we recommend the agency work to recover the funds. SBA management partially agreed with our recommendation, stating they will review and address loans and grants in the child support population that had information on the application or credit report that was not previously addressed. For the remainder of the DNP population, management stated they will review those grants and loans with an alert in the file that was not previously addressed. Management’s proposed corrective actions do not satisfy the recommendation to review the potentially ineligible loans and grants.