Loan Forgiveness Could Lead to Increase in Fraud
July 21, 2020—Last Friday, Treasury Secretary Steven Mnuchin proposed that the government consider forgiving all loans below a certain threshold without verifying what the funds were used for, in order to streamline the process.
The loans requested under the federal Paycheck Protection Program were intended to pay employees, as required by the Cares Act, reports The Washington Post. But without verifying where each of the loans went, lawmakers fear the potential for fraud could be too high.
The Small Business Administration has been called upon by various senators to create a one-page forgiveness form for employers who have borrowed $150,000 or less. The smallest of loans tracked by the SBA are $50,000 and under, and make up nearly 70 percent of all loans in the program.