A U.S. House panel is investigating if multiple banks gave preferential treatment to large, well-funded firms compared to companies in minority or isolated areas when making loans meant for providing COVID-19 relief, Bloomberg reported.
In a letter to Treasury Secretary Steven Mnuchin and Small Business Administration (SBA) Administrator Jovita Carranza, several U.S. representatives said that some big lenders reportedly made a system with two levels to handle Paycheck Protection Program (PPP) applications.
The letter said media reports indicated customers that had the most resources received access to a procedure that made sure their applications were handled first. In contrast, they wrote, “other applicants had to use poor-performing electronic portals, faced significant processing delays, and sometimes needed to find another lender to consider their application.”
The probes are looking for information from the SBA and Treasury regarding the firms that received assistance from the PPP as well as discussions with lenders in terms of the processing and ranking of loans.
In their letter, the legislators urged Treasury and the SBA “to take immediate steps to ensure that remaining PPP funds are allocated to businesses truly in need, and to increase transparency so taxpayers can see whether federal funds are being diverted due to waste, fraud, and abuse.”
In a tweet, Monica Crowley, assistant secretary for public affairs at the U.S. Treasury wrote, “Treasury is fully complying with all of the substantial oversight, transparency, and reporting requirements of the CARES Act.”
The news comes as some Democratic senators have put forward a novel PPP for small companies with a maximum of 100 staffers, with the inclusion of the self-employed and sole proprietorships.
Businesses need to have spent a PPP loan or be on track to utilize the funding and show a loss in revenue of half or greater because of the health crisis to meet the Prioritized Paycheck Protection Program (P4) requirements.