Many small businesses received coronavirus loans twice due to glitch: report

Many small businesses received coronavirus loans twice due to glitch: report
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A glitch in a U.S. government system caused numerous small businesses to receive coronavirus aid loans twice or more, according to several people with knowledge of the matter.

The money that was mistakenly distributed more than once could be upwards of hundreds of millions of dollars that the government and lenders are attempting to identify and recover, Reuters reported, citing a source briefed on the matter.

Sources said the glitch was caused by a blind spot in the Small Business Administration's (SBA) $660 billion Paycheck Protection Program (PPP), which failed to recognize when some borrowers submitted applications more than once, typically with several different lenders, three sources told Reuters.

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The sources providing information include some industry executives and borrowers, as well as Reddit posts, which suggest around 1,020 duplicate deposits were issued to businesses. Based on average loan sizes, the amount of duplicated loans could total up to $116 million.

The Hill reached out to the SBA and the Treasury, which jointly administers the program, but has not immediately heard back.

The PPP loans launched in April allow small businesses afflicted by the pandemic to apply with a bank for a forgivable government-backed loan.

The SBA has approved approximately 4.48 million loans averaging $114,000 for a total of $510 billion as of May 30, according to Reuters.

The program allows businesses to secure loans that are guaranteed. The government said only one loan would be allowed per borrower, meaning any drawback from sending out excess loans would likely fall back on the lender.

According to a post on Reddit, the following companies reportedly deposited duplicate loans: Wells Fargo, JPMorgan Chase, Bank of America, PayPal, Kabbage, Square and BlueVine, Reuters reported.

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"The SBA inadvertently issued duplicate loan approvals to some small businesses. It is our impression that the majority of these borrowers are ... honest small business owners who had applied for a PPP loan through multiple lenders," a spokeswoman for BlueVine said in an email to Reuters, adding "multiple" lenders were affected.

Other companies such as JPMorgan Chase, Kabbage and PayPal responded similarly to Reuters, saying that they were working with SBA to resolve the issue.

The Hill reached out to Wells Fargo but has not immediately heard back. Bank of America declined to comment.