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Press Release | April 21, 2020

This Time Around, Congress Must Implement Meaningful Oversight of SBA Loan Programs

Congressional Oversight

FOR IMMEDIATE RELEASE: April 21, 2020

CONTACT: Jeff Hauser, hauser@cepr.net, (202) 957-9719

Congressional leaders have finally reached a deal to replenish the SBA COVID response loan programs temporarily after days of negotiations. Putting aside the tragically narrow parameters of this deal, House Democrats should only be acceding to further funding these ill-designed programs after they have secured effective oversight of the Trump Administration’s heretofore bumbling execution of the law. 

In the past few weeks, the SBA oversaw a disastrous rollout of these loan programs. Lenders claimed they had not received proper instructions from the SBA, business owners reported the SBA online loan application was crashing, and billion-dollar companies walked away with millions of dollars of loans. Underserved small businesses will likely continue to get pushed out by larger, more powerful corporate chains who have access to more resources.

These implementation problems were inevitable — a Congress that lacks visibility into the executive branch’s capacities and limitations cannot write effective legislation. And because Congress did not demand meaningful oversight of these programs, it will be nearly impossible to hold Trump’s SBA accountable for its failure to efficiently and equitably administer loans. 

This time around, House Democrats should be demanding strong oversight of the SBA programs by

(1) Demanding additional funding for the SBA Inspector General’s Office so that it has the capacity to audit the surge of loan applications;

(2) Creating “for-cause” removal protections for all Inspectors General, including the Inspector General at the SBA; and

(3) Ramping up staffing and funding of the House Committee on Small Business so it can (a) interrogate the SBA’s failed loan program rollout, (b) continue to monitor how taxpayer money is being spent, and (c) determine if alternative models of small business support in Northern Europe are in fact superior to the PPP/EDIL models. 

Trump must not be allowed to remove public servants in the event that they properly hold his appointees accountable. In addition to “for-cause” protections, Congressional Democrats should create a trigger to be included in any new legislation that stops small business funding from flowing if the SBA Inspector General is removed from office for any reason other than a verified medical emergency. Small businesses have genuine political juice. Democrats ought to deploy that juice on behalf of protecting America from a potentially unaccountable president by cutting off the spigot to small business if Trump closes the spigot of oversight.

Congressional Oversight

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