The US Treasury building in Washington, D.C., US
The US Treasury building in Washington, D.C., US, on Sunday, May 22, 2022.
The federal government gave $5.4 billion in Covid-19 aid to small businesses with "questionable" Social Security numbers, according to a report released by a watchdog overseeing pandemic aid.

The Pandemic Response Accountability Committee (PRAC) issued a fraud alert Monday identifying nearly 70,000 questionable Social Security numbers used to obtain pandemic aid from two programs started under then-President Donald Trump and run by the Small Business Administration, the Paycheck Protection Program (PPP) and the Covid-19 Economic Injury Disaster Loan (EIDL).

PRAC's fraud alert comes as the House Oversight Committee, now led by Republican Rep. James Comer, is set to hold its first public hearing on Covid fraud on Wednesday. PRAC chair Michael Horowitz is expected to testify.

PRAC's fraud alert was first reported by The Washington Post.

PRAC said in the alert published online that it analyzed more than 33 million PPP and EIDL loan applications and, working with the Social Security Administration, discovered more than 221,000 questionable Social Security numbers. Those numbers either were not issued by the government or did not match the name and date of birth on record with the government, "suggesting potential identity fraud," PRAC said.

Out of those 221,000 applications for aid with problematic Social Security numbers, the government approved nearly 70,000 of them between April 2020 and October 2022, PRAC said.
"The PRAC identified $5.4 billion in potential identity fraud associated with 69,323 questionable and unverified SSNs used across disbursed Covid-19 EIDL and PPP applications - that is, applications that successfully receive a loan and/or grant," the fraud alert said.
In a statement, a spokesperson for the Small Business Administration said the agency was working to address fraudulent behavior and that it is "committed to tackling issues of identity theft and other types of fraud to prevent the theft of funds from the government, taxpayers and deserving small business owners."

The Paycheck Protection Program was a key part of the federal government's response to the Covid-19 pandemic. In the early months of 2020, it was designed to get money out as quickly as possible to small businesses who were struggling to pay their employees. Small business owners who used the money for a qualifying reason, like payroll, would see their loan forgiven.

While the program successfully helped many companies pay workers during the pandemic, it was plagued by questionable lending and rampant fraud. Both the SBA and lenders were under incredible pressure to get a massive amount of money out within a matter of weeks when the pandemic first hit.

Between a rocky rollout, regularly shifting rules and guidance, and an initial round of funding that favored small businesses with long-term relationships with lenders, there was no shortage of criticism from businesses, banks and lawmakers alike. Disclosures by a series of large public companies and well-known brands, ranging from restaurants like Potbelly, Shake Shack and Ruth's Chris Steakhouse to the NBA's Los Angeles Lakers, also raised pressure on the Trump administration as it worked through the program's earliest days.

This story has been updated with additional details.