DALLAS (CBSDFW.COM) – The federal government’s $500 billion Payment Protection Program was a lifeline during the pandemic for millions of small businesses, but the program has also been plagued with fraud.

As Congress moves towards approving a possible a second round of PPP loans, government watchdog groups say the program needs additional safeguards to prevent fraud.

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A CBS 11 I-Team investigation found in many cases there was little vetting upfront to determine if applicants were telling the truth.

Tim Stretton, a policy analyst for Project on Government Oversight, recommends several measures the government can take that he says will dramatically reduce the amount of fraud.

“Frankly, (the government) has a duty to make sure the money goes to the right individuals and to those who actually need it,” he said.

One recommendation is for the Small Businesses Administration to verify tax documents with the IRS rather than relying on applicants to self-certify their information.

This is the case with most federal loan programs but was not for the PPP.

Stretton also recommends Congress resist automatically forgiving PPP loans.

However, dozens of lawmakers, including Senator Ted Cruz of Texas, support legislation to streamline the forgiveness process for loans less than $150,000.

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To lessen the burden on struggling small business owners, the bill calls for automatic forgiveness on small loans as long as the borrower submits a simple, one-page assertion form to the lender.

Watchdog groups also say more transparency would deter fraud in the future.

Last week, a federal judge ordered the SBA to release names and the amount of money for all PPP loan recipients.

Up to this point, the SBA had only released information on loans larger than $150,000.

The SBA has until November 19 to release the information pending an appeal.

“At the end of the day this is taxpayer money that is being lent to businesses and taxpayers have the right to know who the money has gone to and, frankly, how it has been spent,” said Stretton.


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