Today, House Small Business Committee Chairwoman Nydia M. Velázquez (D-NY) released the following statement after the Small Business Administration (SBA) announced its suspension of certain non-lenders from agency programs and investigation of banks involved in alleged fraud outlined in a recent report issued by the House Select Subcommittee on the Coronavirus Crisis:
"The House Select Subcommittee on the Coronavirus Crisis' report outlined numerous instances of misconduct by fintech companies and their partner banks. SBA's decision to suspend Blueacorn and Womply from further involvement in agency programs is the correct one and is a step in the right direction to holding these entities accountable. Unfortunately, these actions are too little too late to prevent fraud in the Paycheck Protection Program. Independent analysis found that fintechs handled a disproportionate percentage of loans connected to fraud. The risks were clear, but agency inaction and a lack of oversight created a system that fraudsters were eager to exploit.
"As Chairwoman of the Small Business Committee and a member of the Select Subcommittee on COVID, investigating pandemic fraud has been a top priority. In August, President Biden signed my PPP and Bank Fraud Enforcement Harmonization Act into law, which established a 10-year statute of limitations for all PPP fraud. This bill has helped ensure that prosecutors had ample time to pursue cases involving fintechs. I look forward to working with SBA to further investigate pandemic fraud and the organizations identified in the subcommittee's report. It's vital to heed the lessons of this episode and ensure that organizations working with the SBA are properly vetted, and the agency has adequate safeguards in place. This extends to SBA's recent proposal to lift the 40-year moratorium on licensing new Small Business Lending Companies to participate in the flagship 7(a) loan program. I urge SBA to exercise caution in making substantial changes to this successful program and to take the time to review the issues outlined in this report before instituting major policy changes. During the 118th Congress, I am committed to working with the agency and the new majority to protect the integrity of all SBA programs and ensure they serve small business owners as efficiently and effectively as possible."