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When the Paycheck Protection Program began last year to help small businesses that were struggling during the pandemic, the federal government was determined to get the relief money out fast — so it waived much of the vetting lenders traditionally do on business loans. The absence of those safeguards meant that fraud was highly likely. But just how much of the program’s $800 billion was taken illicitly? A new academic working paper released yesterday contains an estimate: Around 1.8 million of the program’s 11.8 million loans — more than 15 percent — totaling $76 billion had at least one indication of potential fraud, the researchers concluded, the New York Times reported. The study pins blame for many of the questionable loans on one particular group of lenders: financial technology firms, known as “fintechs,” which focus on digital lending. Nine of the 10 lenders with the highest rate of suspicious loans fell into that group. “Certain fintech lenders seem to specialize in dubious loans,” the authors wrote. Collectively, fintechs made around 29 percent of the program’s loans but accounted for more than half of its suspicious loans, the study concluded.

In an effort to speed forgiveness of Paycheck Protection Program loans, the government yesterday opened an online portal through which small businesses that borrowed up to $150,000 can apply to have their loans eliminated, the New York Times reported. The Small Business Administration, which administers the program, hopes the new system will streamline the process both for borrowers and for the program’s nearly 5,500 lenders, which collectively made 11.8 million government-backed loans totaling $800 billion between April 2020 and May 2021. Until now, each lender had to set up its own process for collecting loan forgiveness applications and sending them to the S.B.A. for approval. The new system “will simplify forgiveness for millions of our smallest businesses,” said Isabel Casillas Guzman, the agency’s administrator. About 92 percent of the program’s loans fall under the portal’s $150,000 cap. But there’s a sticking point: Lenders also have to agree to use the portal, otherwise the service won’t work for the borrower. So far, about 900 lenders have signed on, but many of the program’s largest lenders, especially big banks, are not on board. Several lenders said they preferred to stick with their own processes out of concern that steering customers to the S.B.A.’s portal would create confusion. Banks are also leery of relying on an agency that has struggled throughout the pandemic with buggy and overloaded technology systems.

The Small Business Administration will allow borrowers with Paycheck Protection Program loans of $150,000 or less to apply online for forgiveness directly from the agency, American Banker reported. Lenders will have to opt in to allow the SBA to process the applications, and they will still issue a decision on whether to grant forgiveness, according to rulemaking documents the agency issued to the industry Wednesday. The agency has not said when the portal might open. The initiative, which the SBA touted as a way to start closing down a program that launched in April 2020, was welcomed by banks that are still dealing with the cost of processing applications from borrowers who want forgiveness. Through May, banks had funneled nearly $800 billion in forgivable PPP loans to small businesses hurt by the COVID-19 pandemic. The Small Business Administration says that loans of $150,000 or less comprise 93% of the outstanding Paycheck Protection Program debt. The SBA said in its rulemaking documents that since last summer, it has received comments from borrowers and lenders stating that “the loan forgiveness process is overwhelming and difficult to manage.”