Use of additional funds for the administration of COVID-19 programs

What GAO found

In FY2020, Congress provided the Small Business Administration (SBA) with approximately $ 3.4 billion in additional funding to administer assistance for small businesses during the COVID-19 pandemic, including programs to loans such as the Paycheck Protection Program (PPP) and Economic Disaster Loans (EIDL). This amount is seven times greater than the SBA’s typical annual resources for salaries and expenses (a budget category encompassing many administrative costs). The SBA’s spending plans show that the agency planned to use the additional administrative funds primarily for contract and personnel costs.

As of January 31, 2021, the SBA had committed approximately 57% ($ 1.9 billion) and spent 49% ($ 1.6 billion) of the additional credits. The SBA used about three-quarters of these funds for contractual services and about one-fifth for personnel costs (payroll, benefits and overtime) (see figure).

Obligations and expenses of the ASB for the financial year 2020 Additional appropriations for administrative expenses as of January 31, 2021, by category of use

Note: The sum of the percentages may not equal 100 due to rounding.

SBA used the additional funds for a variety of contractual services, including (1) loan processing and other loan administration services and (2) information technology products and services. For example, as of January 31, 2021, the SBA had committed approximately $ 750 million in additional funds for a contract to process EIDL loan applications and recommend loan decisions. As of that date, the SBA had also committed approximately $ 150 million for a contract to improve SBA’s technology for the implementation of the PPP loan cancellation provisions. Regarding staff costs, the SBA has determined that it needs significant increases in temporary staff to handle the greater volume of assistance during the pandemic. According to the SBA, the agency has hired more than 6,000 temporary workers – almost half of them for loan specialist positions – for the office that administers the EIDL program. The SBA also reported that it hired nearly 400 temporary workers – about two-thirds of them for loan specialist positions – for other parts of the SBA, including the office that administers P3s.

Why GAO did this study

The COVID-19 pandemic has disrupted small businesses and created an immediate need for emergency funding to keep businesses operating. In response, Congress dramatically increased the amount of loans, grants, and other financial aid available from the SBA. To help the SBA manage the large volume of assistance, Congress provided the agency with additional funds for administrative expenses.

Congress has included a provision in law to allow GAO to account for the use by the SBA of additional funds provided in fiscal 2020 for administrative expenses. This report examines (1) the amount of additional appropriations received by SBA in FY2020 for administrative expenses and SBA’s intended uses of these funds, and (2) the extent to which SBA had committed and spent these funds. as of January 31, 2021, and for what purposes.

To carry out this work, GAO reviewed credit laws, analyzed SBA spending plans and financial data, and interviewed SBA officials.

For more information, contact William B. Shear at (202) 512-8678 or [email protected]

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