New Small-Business Stimulus Plan Fails to Address Fraud Risks

Almost 1,500 companies that earlier got Paycheck Protection Program loans had faced allegations of violating regulations or criminal behavior

By Shane Shifflett of The WSJ. Excerpts:

"The new Covid-19 relief plan for small businesses that President Trump signed this week doesn’t address some weaknesses in the original stimulus legislation that allowed companies with checkered histories to get billions of dollars in payments."

"Nearly 1,500 companies that received about $2 billion in PPP loans have faced allegations of violating government regulations or of criminal conduct, according to a Wall Street Journal analysis of loan recipients and news sources.

Another 432 firms laid off workers after getting approved for nearly $1 billion in loans""The original PPP program skipped the typical lender due-diligence to speed money to struggling businesses. Issues such as violating regulations would likely have been disclosed under typical loans."

"The new legislation doesn’t address how the government will verify revenue declines or whether companies facing litigation or that have violated government regulations should be eligible."