Chairs Launch Investigation into $500 Million Contract in SBA Emergency Loan Program Plagued by Errors and Delays
Washington, D.C. (July 30, 2020) – Today, Rep. James E. Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, and Rep. Nydia Velazquez, Chairwoman of the Committee on Small Business, launched an investigation into a $500 million dollar contract awarded by the Small Business Administration (SBA) to process Emergency Injury Disaster Loan (EIDL) applications. In a letter to SBA Administrator Jovita Carranza, the Chairs wrote:
“We are concerned by reports that millions of small businesses seeking emergency loans have faced long delays, poor service, and processing errors. As the Committees of jurisdiction, it is our duty to ensure that taxpayer money is being spent efficiently, effectively, and equitably.”
After facing unprecedented numbers of EIDL applications from small businesses impacted by the pandemic, SBA outsourced much of its loan evaluation work to Rocket Loans through a pre-existing contract with a small business, RER Solutions. According to Dun & Bradstreet, RER Solutions has 40 employees. The $500 million contract is more than 10 times the value of all federal contracts RER Solutions was awarded in Fiscal Year 2019.
“Recent reports about the EIDL program raise questions about whether RER Solutions and Rocket Loans have provided adequate services to SBA and the millions of small businesses seeking EIDL fund,” the Chairs wrote.
“The EIDL program has reportedly been ‘hobbled by delays and confusion’ that have left many applicants waiting for months for funds. SBA has reportedly ‘struggled to keep up with a flood of more than 9 million applications, nearly 100 times what it had received in previous years.’ The program has been plagued by average wait times of 41 days to process loans, technical glitches that delayed disbursements to many small businesses, a lack of communication with applicants, and widespread reports that businesses have not received funds SBA claimed were disbursed.”
The Chairs’ letters follow a July 28, 2020, report by the SBA Inspector General that highlighted “serious concerns of potential fraud in the Economic Injury Disaster Loan and Advance grant programs that require immediate attention and action.” The Inspector General’s preliminary review revealed “strong indicators of widespread potential fraud in the program,” “$45.6 million in potentially duplicate payments,” and “$250 million in economic injury loans and advance grants given to potentially ineligible recipients.”
In letters to Rocket Loans and RER Solutions, the Chairs explained: “We are seeking to ensure that taxpayer dollars are being spent in the best interest of the American people and not diverted to fraud, waste, or abuse.”
The Chairs requested the production of documents from SBA, Rocket Loans, and RER Solution by August 13.
Click here to read today’s letter to Administrator Carranza.
Click here to read today’s letter to RER Solutions.
Click here to read today’s letter to Rocket Loans.