The media, government officials, and the public have questioned whether funds intended to support small business under the massive Payroll Protection Program (PPP) were actually being directed to support truly needy small businesses. Those concerns have increased as information emerged about the recipients of PPP loans. For example, Super Bowl-winning quarterback Tom Brady received a nearly $1 million PPP loan about the time he purchased a new luxury speedboat. Other stories have focused upon the PPP loans received by politically and financially powerful figures. Most recently, the Justice Department has issued indictments of several figures alleged to have committed fraud and other crimes in connection with the PPP loan program.
Journalists from Bloomberg News recently spoke with Stu Bassin and other leaders of the tax community this week about the recent indictments and their meaning for future loan programs. The consensus view which emerged was that the amount of fraud reported was relatively small in terms of the amount of loans issued. As Stu explained, the need to quickly dispense a large quantity of loans in a short period of time to boost the economy contributed to issuance of questionable loans. There is an “inverse relationship” between the desire to dispense loan funds quickly and the desire to scrutinize loan applications. Future loan programs are likely to operate better because the need for haste will be reduced and the government will develop better processes for reviewing loan applications.
A copy of the Bloomberg article can be found here. Click here for Bloomberg article.