top of page

NEWS | President Biden Introduces Proposal to Combat Effects of Pandemic Fraud

It is impossible to determine how added safeguards could have potentially slowed the disbursement of funds to those small businesses most in need.

At the outset of the pandemic as business closures were mandated, small businesses faced the very real possibility of laying off workers and possibly never opening their doors again.

NSBA and other small-business groups implored Congress to seek some lifeline for these businesses and their employees and the Paycheck Protection Act (PPP) came to be. The PPP was broadly supported by lawmakers on a bipartisan basis and was passed in less than two weeks—a remarkable speed for Congress. The tenets for providing these loans: make it simple for small businesses to apply and make the approval process quick.

Unfortunately, bad actors chose to exploit those tenets, which led to a significant amount of fraud – bad actors who defied the intent of the law and the PPP program to make a profit.

Government officials overseeing the pandemic funds’ distribution—and many others—have since conceded that additional safeguards could have prevented some fraud associated with these federal dollars. The difficulty with such criticisms is that hindsight is 20-20: it is impossible to determine how added safeguards could have potentially slowed the disbursement of funds to those small businesses who most needed it.

This week, President Biden announced a new plan to address pandemic fraud and the effects it caused for the small-business community. Centered around implementing stronger fraud and identity theft prevention moving forward, the proposal is in three parts:

  1. Ensure resources & time for investigations and prosecution of those engaged in major or systemic pandemic fraud ($600 Million); and

  2. Invest in fraud prevention and identity theft ($600 Million); and

  3. Help the victims of identity theft ($400 Million).

With $1.5 billion directed at reconciling the impacts of pandemic-related program fraud, law enforcement and agencies will be equipped to pursue recovery of the funds and justice for those committing the fraud.

While NSBA condemns fraud and supports efforts to recover what amounts to stolen federal funds, it is imperative this effort not be unduly directed at small businesses or owners’ accidental errors in applying for pandemic programs.

Relatedly, the Small Business Administration (SBA) – responsible for overseeing and implementing a significant portion of the country’s pandemic-related programs for small-business owners – would be better equipped to implement President Biden’s proposal with a full staff. For too long, key roles at the SBA have been vacant, and filling those roles must also be a priority for the administration.

Read more about the White House’s proposal here.

Read more about NSBA’s call for a fully staffed SBA here.


bottom of page