Velázquez comments on abuse of fed loan program by poultry industry
WASHINGTON – Rep. Nydia M. Velázquez, D-N.Y., the top Democrat on the House Small Business Committee, commented today on a new report released by the Small Business Administration’s Office Inspector General that finds more than a billion dollars in SBA-backed loans may have inappropriately gone to ineligible companies operating in the poultry industry.
“When SBA loans go to firms that aren’t supposed to receive them, it means there are fewer resources available for deserving, small businesses who struggle to secure capital,” Velázquez said. “The findings in the OIG report are profoundly troubling and I look forward to working with Chairman Chabot to exercise vigorous oversight, including potentially holding hearings in the future.”
The OIG’s recently released report found that large chicken companies exercised such control over chicken growers that government-backed small business loans made to the growers should not have been eligible for assistance under the SBA’s flagship 7(a) program. In fact, the report suggests, between fiscal year 2016 and fiscal year 2017, $1.8 billion worth of ineligible loans may have been made to chicken growers.
“It appears from this report that chicken growers that are effectively controlled by Big Agriculture are benefiting from taxpayer-backed loans that are meant for small companies,” Velázquez added. “It remains to be seen whether this is a violation of SBA procedure or the law, but certainly it runs afoul of the intent of this program, which is to help small business and startups that struggle to access credit elsewhere.”
The OIG recommended that the SBA’s Office of Capital Access review the loans in question and determine whether they violated the agency’s eligibility rules. SBA has agreed to do so.
“While I am glad the Inspector General has drawn attention to this matter, it is disconcerting these loans were made in the first place,” Velázquez concluded. “Our committee and congress have an obligation to investigate this problem further and ensure there are safeguards in place to prevent similar problems in the agriculture and other sectors in the future.”
The OIG’s report is on SBA’s website at https://www.sba.gov/sites/default/files/oig/SBA-OIG-Report-18-13_0.pdf.
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