For immediate release: April 21, 2023

Contact: [1] [email protected]
Ernst Says SBA Must Be Held Accountable for Pandemic Relief Funds that Were Misspent
“I'm deeply concerned that the agency is way too eager to wipe all of the fraud off the books.”

WASHINGTON, DC – In remarks yesterday morning before a breakfast meeting of The Ripon Society, U.S. Senator Joni Ernst (R-IA) talked about her role as Ranking Member of the Small Business and Entrepreneurship Committee and the effort she is leading to recover taxpayer funds that were lawfully appropriated during the COVID-19 crisis and ended up being unlawfully misspent.

“My top priority at the Small Business Committee is to keep pressure on the Biden administration to make sure that we are recovering fraud funds allocated from within the SBA's pandemic programs,” she said. “There is a conservative estimate out there that puts the total fraud at more than $100 billion for the SBA's Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL) combined.

“Folks, that's a lot of taxpayer dollars. In DC we banter around billions like it's nothing but, when I go back home to Iowa and talk about it, that's a significant amount of money.”

It is also something, Ernst said, that she has sounded the alarm about.

“In January, I sent a letter to the SBA Inspector General, and I alerted him to a new report from the Pandemic Response Accountability Committee that nearly 70,000 EIDL and PPPs loan applicants used fraudulent Social Security numbers, and that totaled more than $5.4 billion. That's just with the fraudulent use of Social Security numbers. I'm deeply concerned that the agency is way too eager to wipe all of that fraud off the books.
“What I've learned recently is that the SBA plans to wipe off their books- the collections on the EIDL and the PPP loans that are less than $100,000. They won't even go after any of that. Any loan $100,000 or less, they're just going to let it go. They just want to move on. That wasn't the original agreement with these loans. And so, if they're wiping all that out, it is approximately $72 billion just gone. Through the hearings opportunities that we've had at the Small Business Committee, I've had the chance to engage the SBA Administrator and ask her about prioritizing fraud recovery.

“I received firm commitments from the SBA Deputy Administrator nominee on a zero-tolerance policy when it comes to fraud. He made that commitment before the committee, and we're going to have to hold his feet to the fire now that he's assuming that position. So, we'll keep the pressure up. We'll work on any legislative solutions. We need to recover these stolen funds in a timely manner, and we need to send a clear message to future bad actors.”

The Hawkeye State legislator then shared the story of a small businessowner, a fellow Iowa State alum, and the struggles she faced to keep her business afloat through the pandemic by working through the SBA.

“We all know and understand that the SBA needs to be modernized and operate more efficiently,” Ernst observed. I had a young lady that came with me to the State of the Union address representing a small business from Iowa. She told me that as she was going through the loan process and was looking at a number of the programs offered through the Small Business Administration. She said, ‘Senator, I had to fax in my application. It was required that I fax in my application. I don't even own a fax.’ Most people don't anymore. It just shows you that so many of the programs are outdated. We really need to modernize, and we've got to be more efficient.”

On the topic of reauthorization, the Senator shared that she is working to right-size the SBA.

“After spending more than a trillion dollars in SBA Covid Aid, the core SBA programs continue to expand. They expand with little or no accountability. So not only do we need to modernize, we need to continue to provide the oversight to tamp down on some of that expansion and make sure that they're focusing on efficiency rather than just growing unchecked. Any SBA reauthorization needs to include a serious discussion about reallocating funding into programs that really do have a high return on investment. That's what we should focus on and eliminate the programs that are antiquated and duplicative. Lastly, we need to right-size programs to match the reality of our out-of-control national debt.”

In her closing statements, Senator Ernst discussed her role as Chair of the Senate Republican Policy Committee (RPC).

“My vision was to revitalize the committee and turn it into a resource that every Senate Republican office could use and trust,” she said. “My goal for the RPC is to provide a timely, yet very substantial policy analysis that fairly reflects the views of our caucus. Since taking over that position, I am pleased to say that the committee has executed my vision. My colleagues will frequently come up to me and thank me for changing the way we do business in the RPC. And they often state that it does really provide valuable analysis that they can act on, and that we're focusing on those most important issues facing the country.”

Following her remarks, Ernst took a number of questions, including one about her role as a member of the Senate Armed Services Committee and the outlook for passing the annualNational Defense Authorization Act (NDAA)this year.

“There are a number of things that I'm working on in the NDAA that are very important to me,” she stated. “My subcommittee is Emerging Threats and Capabilities, so [we need to be] focusing on the next technology that we need to watch and invest in. Things like AI machine learning -- we've heard a lot about AI recently, and it scares the holy bejesus out of me. But we do have to continue to keep up with AI because we have a number of adversaries out there who have invested heavily, with the elephant in the room being China.”

Ernst noted that she has also been working to support the Army Ammunition Plant in her home state.

“We have contracts with various munitions companies that operate out of this facility,” she said. “I am trying to secure additional money for additional lines at the Iowa Army Ammunition plant. What we have seen during the war in Ukraine is that we have a bottleneck when it comes to producing munitions in the United States. And so we are trying to build up not only the Iowa Army Ammunition Plant, but other manufacturers across the United States. Thus as we're looking at Ukraine and as we're looking at other potential fights around the globe, including Taiwan, we know that we can modernize facilities and get them where they need to be. Not only to keep a steady state for our own forces, but to make sure that in the case of one of those other fights, if we need to engage, that we are ready and prepared.”

To view the remarks of Senator Ernst at yesterday’s breakfast discussion, please click the link below:

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The Ripon Society is a public policy organization that was founded in 1962 and takes its name from the town where the Republican Party was born in 1854 – Ripon, Wisconsin. One of the main goals of The Ripon Society is to promote the ideas and principles that have made America great and contributed to the GOP’s success. These ideas include keeping our nation secure, keeping taxes low and having a federal government that is smaller, smarter and more accountable to the people.

For more information on The Ripon Society, please visit [3] www.riponsociety.org.

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