(Center Square) – Louisiana and two U.S. senators are raising concerns over a $ 3.5 trillion congressional budget bill that would provide billions in direct government loans to small businesses.
U.S. Sen. John Kennedy and Bill Cassidy, both Louisiana Republicans, and 13 other senators described the plan as “ineffective, expensive, and unreasonable.” Letter Seats have been transferred to the US House and Senate leadership and to both chambers of small business committees.
Section 100502, or Financial Assistance, provides nearly $ 4.5 billion in direct loans to the US Small Business Administration (SBA) for 7 (a) loans over 10 years.
7 (a) loan Program It provides up to $ 5 million to eligible borrowers for real estate, short- and long-term capital, to repay current business debt, and to use “furniture, appliances, and supplies.”
Opposition senators’ main concern is tax liability. He said the inclusion of private bank lenders in the SBA loan process includes built-in financial control, but direct government loans encourage abuse.
The letter states: “It is a mistake to offer a $ 4.5 billion SBA to run an additional 7 (a) loans to small businesses. Without accurate measurements, the direct loan scheme can fall into a lot of fraud and abuse.
The letter referred to the SBA Chief Inspector’s Office Report The government-run Economic Disaster Loan (EIDL) program has developed and improved $ 79 billion in fraudulent loans.
OIG has been alerted to the risk of fraud by the private lending program when private financial institutions report red flags when receiving loans.
“We have received more than 5,000 suspected fraud cases,” the OIG report said.
Unfortunately, the day after the senators’ October 6 letter arrived, the SBA’s superintendent general resigned. Report He paid $ 4.5 billion in “unreasonable” small business claims for the EIDL program.
OGIG has erroneously accepted taxpayers’ financial support for 700,000 applicants claiming to be sole investors and independent contractors and employing up to 1 million workers. The required tax identification numbers were not provided, OIG said.
The report concludes: “SBA has approved thousands of grants.
“Compared to the PPP (payroll protection program), only $ 4.6 billion has been identified,” said CARES Law loan program senators, which includes 5,467 private lenders serving 12.6 loans. Of the $ 800 billion for the entire program, that’s just 6% of the total.
The proposed SBA 7 (a) loan is included in a $ 254 billion small business package and is itself included in the 2,465-page budget proposal.
Republican Chamber of Commerce Chair Nidia Velazquez, for her part, told the DNA Committee in September that the financial package is crucial for the US economy to survive the COVID-19 epidemic.
“Small businesses are the foundation of our economy and ultimately the key to our country’s full economic recovery,” Velazkez said. The small business policies we have developed today represent a generational investment in American entrepreneurship and will help businesses recover from Kovi now and prosper in the future.
The Consumer Banks Consumer Banks Association, which has members in all 50 states, may lose 7 (a) loans directly to private lenders due to favorable SBA loan conditions.
as if Letter Richard Hunt, Congressman and CEO of Congress, said: “In addition to the fraud scandal, the new congressional loan scheme created by Congress creates the threat of a government-subsidized SBA direct loan program that competes with private investors who have invested heavily. Being able to lend in 7 (a) years.
Hunt floated an agreement to increase government support for smaller businesses.
“Perhaps a more constructive policy would consider Congress to continue the CARES provisions, which amend 7 (a) loans,” Hunt said.