COVID Fraud Transparency Act of 2025: SBA Watchdog to Report on Loan Fraud Every Three Months

The COVID Fraud Transparency Act of 2025 is all about keeping tabs on where those COVID-19 relief loans actually went. The bill mandates that the Inspector General (IG) of the Small Business Administration (SBA) – basically the internal watchdog – has to report to Congress every three months on any fraud found related to COVID-19 loans. This reporting requirement lasts for two years.

Digging into the Details

The bill focuses on transparency and accountability for loans issued under sections 7(a)(36), 7(a)(37), and 7(b) of the Small Business Act. These sections cover the Paycheck Protection Program (PPP) loans, other disaster loans, and economic injury disaster loans (EIDL) specifically offered during the COVID-19 pandemic. Starting 60 days after this bill becomes law, the SBA's Inspector General has to deliver a detailed report to the House and Senate Committees on Small Business. This report, due every three months, will include:

• The total number and dollar amount of all covered loans.
• The number of new fraud cases and those already suspected.
• How many fraud cases have been closed.
• What kinds of fraud are popping up (SEC. 2).

Real-World Implications

Imagine you're a small business owner who played by the rules and used your loan to keep your staff paid during lockdowns. This bill aims to make sure everyone else did the same. By tracking and reporting fraud, the Act intends to shine a light on any misuse of funds. More transparency could mean more confidence in how taxpayer money was handled, and potentially, recovering funds that were taken fraudulently. For example, if a company claimed they had 100 employees to get a bigger loan but only had 10, that's the kind of thing this reporting would aim to catch.

The Catch

There's a bit of a twist: the bill says no new money can be used to make this happen (SEC. 3). This "CUTGO" provision, short for "Cut-As-You-Go," means the Inspector General has to do all this extra work with the resources they already have. While keeping a lid on spending sounds good, it might also mean the IG's office is stretched thin, potentially limiting how deep they can dig. Also, the reporting only lasts for two years. While that's enough time to catch a lot of the initial fraud, some more complicated schemes might take longer to surface. Think of it like this: if someone's cooking the books, it might take more than a couple of years for the full picture to emerge.

The Bigger Picture

This bill fits into the larger effort to keep government spending in check and ensure accountability, especially with emergency funds. It builds on existing laws like the Small Business Act, adding an extra layer of scrutiny specifically for COVID-19 relief. By making fraud reporting a regular requirement, Congress is signaling that they're serious about tracking down any misuse of these funds. The aim is to make sure that relief money went where it was supposed to – helping genuine small businesses stay afloat.