Clyburn Seeks Key PPP Documents Withheld by Trump Administration

Washington, D.C. (March 03, 2021) — Today, Rep. James E. Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, sent a letter to the Treasury Department and the Small Business Administration (SBA) renewing the Select Subcommittee's investigation into the disbursement of funds under the Paycheck Protection Program (PPP). The letter follows the Select Subcommittee's findings, after months of obstruction by the previous Administration, that the Trump Administration failed to prioritize underserved communities and issued more than $4 billion in loans that may be subject to fraud.

"Due to the Trump Administration's refusal to comply with the Select Subcommittee's investigation, the Select Subcommittee was unable to obtain key information about how Treasury and SBA managed the program," Chairman Clyburn wrote. "I am encouraged by the Biden Administration's recently announced enhancements to the PPP, which will help target the program as Congress intended and prevent fraud. The Select Subcommittee is continuing its investigation to understand what went wrong last year and determine whether additional steps are needed to ensure that remaining PPP funds are allocated to small businesses truly in need."

Congress established the PPP to help small businesses and non-profit organizations survive the coronavirus crisis by providing forgivable loans to cover payroll, rent, and utility payments. The CARES Act urged SBA to issue guidance to prioritize small businesses in "underserved and rural markets," and the 2021 Consolidated Appropriations Act required SBA to "issue guidance addressing barriers to accessing capital for minority, underserved, veteran, and women-owned business concerns for the purpose of ensuring equitable access to covered loans."

The Select Subcommittee launched an investigation into the previous Administration's implementation of the PPP on June 15, 2020. Despite obstruction from the Trump Administration, the Select Subcommittee found that Treasury, SBA, and several large financial institutions failed to implement PPP as Congress intended, resulting in minority and women-owned businesses facing obstacles to access PPP loans. In particular, the previous Administration privately encouraged banks to limit their PPP lending to existing customers, and several lenders processed bigger PPP loans for wealthy customers at more than twice the speed of smaller loans for the neediest small businesses.

The Select Subcommittee also found that Treasury and SBA failed to institute adequate safeguards to prevent fraud, waste, and abuse, leading to more than $4 billion in potentially fraudulent loans. Chairman Clyburn referred the matter to the Inspectors General at Treasury and SBA for review. The SBA Inspector General found that under the Trump Administration nearly 55,000 loans for approximately $7 billion were issued to potentially ineligible businesses, and SBA did not implement controls "that could have reduced the likelihood of ineligible or fraudulent business obtaining a PPP loan."

On February 22, 2021, the Biden Administration, in a sharp departure from the Trump Administration, announced changes to the PPP to promote more equitable access to relief and prevent waste, fraud, and abuse.

Today's letter concluded: "[I]t remains important to understand why the previous Administration failed to implement the PPP as Congress intended, in order to learn from these mistakes and identify any additional steps that must be taken to help the neediest small businesses and eliminate fraud, waste, and abuse."

The letter requested documents and a staff briefing from the Treasury Department and SBA.

Click here to read today's letter to the Treasury Department and SBA.

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