15% of PPP payday loans online could be fraudulent, study finds

“Cross River is a state chartered and FDIC insured bank with strong regulatory standards,” said Phil Goldfeder, a spokesperson for the bank. “Unlike other lenders who prioritized their own clients, Cross River responded to the SBA’s call to action and did not limit the program to existing clients.”

Before the study’s publication, Blueacorn sent a letter to Jay Hartzell, president of the University of Texas at Austin, opposing the researchers’ approach. Blueacorn said that based on provisional data released by the Small Business Administration before the P3 ended, the study counted loans that its lenders initially approved but later canceled due to suspicious traits. Almost 157,000 applications – roughly 16% of all loans approved by Blueacorn’s lenders – were canceled by lenders before they were paid payday loans online"}” data-sheets-userformat=”{"2":513,"3":{"1":0},"12":0}”>payday loans online

“As we review increasing volumes of payday loans online applications, we have learned, adapted and improved our fraud detection capabilities and protocols,” Barry Calhoun, Managing Director of Blueacorn, said in a written statement. “Along the way, we have partnered with the SBA and other authorities to ensure the integrity of the PPP while providing a traditionally neglected population with access to the funds they need and deserve.”

The researchers said they hoped their work would help inform the ongoing political debate about the effectiveness of the paycheck protection program.

“Our evidence, together with the evidence that PPP saved relatively few jobs at a high cost, provides growing evidence that PPP appears to have been a misallocation of capital,” they wrote. “The breadth of tens and hundreds of thousands of suspicious loans issued by many fintech lenders suggests that many lenders either encouraged such loans, turned a blind eye, or had lax monitoring procedures. “

Matthew Coleman, spokesperson for the Small Business Administration, said that under the leadership of its administrator, Isabella Guzman, the agency had “implemented reforms to reduce fraud and expand access to smaller businesses and businesses. belonging to minorities and remedy serious shortcomings in the implementation of the program by the previous administration to resolve both problems.


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