SBA found susceptible to fraudulent claims

The Small Business Administration is struggling to determine which loan applicants are fraudulent, and so far, the agency’s record has been less than perfect.

The Government Accounting Office has found that in the past year, 29 firms have been wrongfully awarded funds meant for companies in historically distressed economic zones, totaling $66 million in federal contracts.

While the agency says it has made efforts to implement new detection procedures such as new documentation requirements and site visits, Matt Valenta, the GAO’s assistant director for forensic audits and special investigations, found that fraud persists, the Los Angeles Times reports.

Valenta’s office submitted four fake applications, including one from one of the applicants discovered to be using dishonest means, and all were accepted by the SBA, except one, which was lost, the paper writes.

According to the Times, Valenta’s office also investigated the 29 previously identified firms and found that all of those companies were still receiving federal aid.

SBA lending has declined in certain regions of the nation. In Wisconsin, SBA lending plummeted to $15 million in July - down from the past fiscal year’s average of $55.3 million per month.