A federal small-business pandemic emergency loan program that has been criticized for delays and fraud has focused attention on the role of a small consulting firm that earned nearly $800 million in fees and subcontracted the work to a unit of the nation’s largest mortgage lender, the Wall Street Journal reported. Federal government contracting records show the Small Business Administration has awarded at least $770 million to RER Solutions Inc. of Herndon, Va., to process loans and grants for small businesses affected by the coronavirus pandemic under the SBA’s Economic Injury Disaster Loan program, or EIDL. That is a steep increase from a $10 million contract the company initially signed with the SBA in 2018. The bulk of that loan-processing work was then subcontracted to Rocket Loans, a unit of lending giant Rocket Cos., which also owns Quicken Loans, according to both Rocket and federal officials, though its name doesn’t appear in any of the publicly available documents on the federal contracts awarding the work to RER. Under the EIDL program, more than 3.6 million loans worth $188 billion have been issued to date since the pandemic, in addition to $20 billion in grants to 5.8 million companies, according to the SBA. The SBA is the administrator of the program, which is separate from the SBA’s $670 billion Paycheck Protection Program, where banks and other financial services companies act as intermediaries in assessing applicants and processing loans. Groups representing small businesses say the EIDL loan program has been plagued by delays. Karen Kerrigan, who heads Small Business & Entrepreneurship Council, an advocacy group, told House lawmakers in June the execution of EIDL went badly, leaving hundreds of thousands of small-business owners ”demoralized, confused and angered.” She says the program has improved since. The EIDL program also came under criticism from the SBA’s inspector general, which in a July report cited “pervasive fraudulent activity,” pointing to more than 5,000 instances of suspected fraud from banks where EIDL funds were deposited in customer accounts. The IG estimated that about $250 million in loans and grants have gone to businesses that could be ineligible.
