Senator Joni Ernst, Chair of the Senate Committee on Small Business and Entrepreneurship, addressed concerns about fraud in the Small Business Administration’s (SBA) COVID-19 relief programs. She urged Congress to pass her SBA Fraud Enforcement Extension Act before statutes of limitations expire for these programs.
Ernst highlighted that while pandemic relief initiatives such as the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) provided crucial support to small businesses, insufficient oversight and reliance on self-certification allowed an estimated $200 billion in fraudulent loans.
“Nearly six years ago, the Small Business Administration’s pandemic relief programs provided a much-needed lifeline for small businesses in Iowa and across America.
“Millions of small business owners and their employees were saved from closure and mass layoffs thanks to Paycheck Protection Program and Economic Injury Disaster Loan funds awarded by the SBA.
“But as we’ve seen time and again, when government funds seem ‘free’ for the taking, bad actors are ready to steal and scam.
“But government programs should never be able to be exploited at the American taxpayer’s expense in the first place.
“However, the lack of oversight mechanisms in SBA’s COVID relief programs, coupled with the quick disbursement of funds to save shuttered businesses, allowed swindlers to rob taxpayers of $200 billion in pandemic relief loans.
“The Pandemic Response Accountability Committee, or PRAC, sounded the alarm years ago on how allowing applicants to self-certify their eligibility increases fraud. Self-certification allows the government to rely on an applicant’s promise that they meet program requirements.
“The SBA Office of Inspector General repeatedly echoed their concernsabout this system.
“Unfortunately for taxpayers, the Biden administration ignored repeated watchdog warnings, allowing blanket forgiveness without additional verification on PPP loans under $150,000 and potentially allowing a large swath of fraud to escape meaningful scrutiny.
“Self-certification was known to be a major problem as more pandemic relief programs were created.
“Consider the Restaurant Revitalization Fund (RRF) and Shuttered Venue Operators Grant (SVOG) programs.
“These opened a menu of fraud for the taking.
“In 2024, music artist Chris Brown exploited these awards to the tune of $10 million.
“Half of these funds were paid directly to the singer himself.
“Additional funds were spent on an $80-thousand-dollar birthday party.
“The SBA never should have been running a drive-thru for fraudsters.
“However, even though the RRF program had a 20-location limit for franchisees, restaurant chain CoreLife Eatery – with 29 locations – still got served $7.8 million from taxpayers that it never should have been allowed to receive.
“But talk about fast fraud made to order, one Oregon dentist – known for illegally distributing pharmaceuticals – used his personal address and fictitious restaurant names in Florida to generate nearly $8 million in RRF payments.
“To date, PRAC has diligently helped law enforcement partners expose more than $2.4 billion in estimated fraud loss.
“IG Kirk’s recent appointment as PRAC Chair highlights how critical it remains to claw back these funds, especially across SBA programs.
“Last July, the SBA OIG flagged an astonishing $544 million of potential improper payments in the SVOG program, yet the Biden administration continued ignoring the problem. Ultimately, officials from the previous administration did not refer a single case to Treasury.
“Fraudsters can’t be left off the hook just because time has passed.
“Congress must pass my SBA Fraud Enforcement Extension Act to extend the statutes of limitations for SVOG and RRF programs and give investigators the time they need to continue going after crooks.
“Without my legislation, as soon as April, fraudsters who stole funds will escape justice.
“You heard me right, folks, in a little over a month, some of SBA’s COVID programs can no longer be prosecuted.
“The good news is my statute of limitations bill has already passed the House, and this Committee.
“It is now pending before the full Senate.
“I call on Democrats to stop blocking this legislation so there can be real accountability.”
Ernst also noted ongoing efforts by federal agencies: “I am grateful that current administration knows that job is not finished. The SBA is conducting manual reviews of more than 10,000 RRF awards totaling over $3 billion.” She said over 1,000 awardees did not submit required post-award reports documenting spending; demand letters went out regarding another 8,000 awardees involving over $1.2 billion; hundreds more demand letters targeted SVOG grant recipients whose grants total over $150 million if unaccounted for. She emphasized that reviewing both programs before statutes expire is essential work: “This critical work must continue.”
She cited actions taken by Administrator Loeffler suspending more than 110,000 California borrowers who received over $8.5 billion potentially fraudulent COVID relief funds; Minnesota investigations uncovered at least $9 billion misused state/federal money including PPP loans worth around $400 million—prompting swift action from Loeffler. Ernst referenced Republican committee members’ letter supporting Loeffler’s efforts against such schemes earlier this month.
According to Ernst’s official website, she leads Iowa representation within several key Senate committees including Small Business & Entrepreneurship; her office handles constituent services statewide like casework or facilitating interactions with federal agencies.
Ernst concluded: “I look forward hearing from our federal watchdog partners today on how they are tackling fraud recovering taxpayers’ hard-earned dollars… Thank you for your service.”
