The report was launched by the inspector basic of the Small Business Administration

More than $200 billion could have been stolen from two massive COVID-19 reduction initiatives, in response to new estimates from a US federal watchdog, Fox News reported. Notably, the watchdog was investigating federally funded applications that helped small companies survive the pandemic. 

On Tuesday, the inspector basic of the Small Business Administration (SBA) released a report that offers the most important estimate but of how a lot of the $1.2 trillion disbursed by the SBA was stolen by fraudulent claims.

The report targeted on two applications created throughout a pandemic to assist small companies, each beneath the SBA’s purview: the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL).

The report mentioned, “At least 17 percent of all COVID-EIDL and PPP funds were disbursed to potentially fraudulent actors”. 

The fraud estimate for the COVID-19 Economic Injury Disaster Loan program is greater than $136 billion, which represents 33 % of the full cash spent on that program, in response to the report. Meanwhile, the Paycheck Protection fraud estimate is USD 64 billion.

Of the 22.1 million loans and grants disbursed, 21%, or 4.5 million, had been handed to potential fraudsters. 

“In the frenzy to swiftly disburse COVID-19 EIDL and PPP funds, SBA calibrated its inner controls. The company weakened or eliminated the controls crucial to stop fraudsters from simply having access to these applications and supply assurance that solely eligible entities acquired funds. Because of the “allure of ‘easy money,’” an amazing variety of fraudsters had been drawn to this system and took “advantage of the economic crisis and [diverted] funding intended for deserving eligible American small business owners,” the report said.

As a result, multiple federal agencies are working to recover the stolen money. So far, nearly $30 billion in COVID-19 EIDL and PPP funds have been seized or returned to the SBA, the inspector general said.

The report also noted that as of May, the oversight has resulted in 1,011 indictments, 803 arrests, and 529 convictions—all related to Covid-19 PPP and EIDL fraud, as per Forbes. The inspector general’s office is still working on tens of thousands of investigative leads on waste, fraud, and abuse in the loan programs, expected to continue for years.

In a 2021 interview with ABC News, SBA Inspector General Hannibal Mike Ware predicted that the amount of fraud from Covid relief programs would be “larger than any government program that came before it.”