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Financial technology firms abdicated their responsibility to screen out fraud in applications for a federal program designed to help small businesses stay open and keep workers employed during the pandemic, a report by a House investigations panel said yesterday. The House Select Subcommittee on the Coronavirus Crisis launched its investigation of the firms in May 2021 after public reports that the firms were linked to disproportionate numbers of fraudulent loans issued under the Paycheck Protection Program. Former President Donald Trump rolled out the Paycheck Protection Program to help small businesses stay open and keep their workers employed. President Joe Biden maintained the program and directed money to more low-income and minority-owned companies. All told, $800 billion was spent on the program. The financial technology firms reviewed PPP applications for lenders, which would ultimately distribute PPP money to businesses. The report said two start-ups, Blueacorn PPP and Womply Inc. — which reviewed one in every three funded PPP loans in 2021 — were connected to significant percentages of PPP loan applications with indicators of fraud. It said the firms used questionable screening procedures and business practices in reviewing the loans, leading to “the needless loss of taxpayer dollars,” the report said. The firms “took billions in fees from taxpayers while becoming easy targets for those who sought to defraud the PPP.” The report said Womply’s fraud prevention practices were so lax that lenders describe its systems as “put together with duct tape and gum.” It said Womply’s software became a preferred product for criminal enterprises seeking to defraud the government of PPP loans. The firm also received over $5 million in PPP loans for itself, which the Small Business Administration later determined it was ineligible to receive.

A South Side restaurant and bar known for more than two decades as one of Pittsburgh’s best places for British fare — and a popular gathering place for soccer fans to knock back a pint and watch the World Cup — is reorganizing, the Pittsburgh Business Times reported. MacTavish Pubs Inc., which does business as Pipers Pub, on Nov. 21 filed for chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of Pennsylvania in downtown Pittsburgh. The company has reportedly listed debts of around $3 million and their plan for reorganizing is due by the end of March.

Add rising interest rates to the challenges that small businesses are already grappling with, including inflation, labor shortages and strained supply chains, the Wall Street Journal reported. Some small businesses are cutting back on borrowing, paying down debt or delaying expansion plans as interest rates rise. Others worry that rising rates will boost prices charged by suppliers and crimp customer demand. In November, the Federal Reserve raised its benchmark federal-funds rate by 0.75 percentage point, the fourth such increase this year, and said further rate increases were likely. For small businesses, those rate increases translate to higher costs on everything from credit cards to lines of credit to variable-rate small business loans. New financing has also gotten more costly. Forty-six percent of small-business owners said higher interest rates are affecting their business, according to an November survey of roughly 600 small businesses for the Wall Street Journal by Vistage Worldwide Inc., a business coaching and peer advisory firm. Another 25% of those surveyed said rising rates hadn’t yet had an effect, but anticipated they would.